Sunday, December 23, 2007

Holiday Roundup

Flame out - Tracy Press
City of debt shows US housing woe - BBC News
2007: A look back in business, and a peek at the future - Stockton Record
Mortgage meltdown has analysts on edge - Modesto Bee
Year in Manteca marked by foreclosures, Iraq war Mantecas year that was - Tri-Valley Herald
Homes tax economy: Shasta County faces jobless increase, sales shortfall - Record Searchlight
Foreclosures hit home - Appeal Democrat
Behind the Meltdown: Six local lenders who rarely said no - Sacramento Bee
Builder's Demise Threatens Homeowners (video) - News10
Home Front: Troubled sellers get tax break - Sacramento Bee
New homes sit, wait - Stockton Record
Homebuilding stuck in doldrums here and throughout the state - Merced Sun-Star
Behind the Meltdown: Lincoln's boom fades out - Sacramento Bee
Things were good – except for the meltdown - Stockton Record
2007 was the year of the real estate bust - Merced Sun-Star
Blame abounds for housing bust - The Washington Times
Prudential California Reality Closes Tracy Office - Tracy Press
Dunmore brothers face lawsuits, alleged defaults - Sacramento Business Journal
Eleven Cars Vandalized In West Sacramento - Fox40
Risk & Rewards: Taste of hard times Once-thriving restaurants now face business slump fueled by housing market crisis - Sacramento Bee
Alliance Title Workers Face Grim Holiday - News10
Option ARMs: Next Weakling - Wall Street Journal
Median home price here down 18% in a year - Sacramento Business Journal
Upturn in Yolo home sales - Daily Democrat
Climb Aboard the Bus! - ABCNews
Y-S jobless rate climbs near 10 percent - Appeal Democrat


Professor Shays said...
This comment has been removed by the author.
Professor Shays said...

If anyone doubts the seriousness of this real estate bubble crash, it is important to recognize signs like the recent closing of Alliance Title. In the last downturn (89-95), we witnessed the closing of small escrow branches, but with the exception of one relatively small underwritten title company in Southern California, the title business survived. Here we are, barely two years into the market decline and we find a company owned by Mercury is closed. More telling perhaps is the fact that a visit this morning to, results in only the following information:
"Sorry for the inconvenience, but our website is currently unavailable while it is undergoing maintenance and enhancements."

KTM 300 said...


But, does anyone know what is going to be done to make sure that ONLY owner occupied homes qualify for the “plan” mortgage interest rate freeze? My concern is that we will have smart flippers and the like, transfer their flips and investment properties into the names of their children, or into trusts, corporations etc, while maintaining control of the property, and getting a benefit that the spirit and intent of the program was not designed for. Prices remain too high for me to buy do to speculation. One thing that just cannot happen is for those greedy SOBs to outsmart the system and come out of this smelling like a rose.

Cmyst said...

ya know, KTM, I just wouldn't worry about it. So many people ripped off the system for so long to get us into this mess, and of course there will be people ripping it off again.
But from everything I've heard, it is going to be very difficult for people to qualify for the help. In the first place, the house has to be worth more than they're borrowing, and that cuts most of the recent purchasers out right there. And there will be another huge wave of PRIME borrowers who are in trouble in the next year or so. The government can't bail all the FB's out of this.
I know this really bugs you, because I remember you brought it up on another thread, but really --
in this old world, there are always cheaters and liars and hypocrites and frauds.

SacramentoCrash said...

Dunmore deserves to have his jet plane repossessed!

RMB said...


Just for anyone who is interested. Here is the latest from Lathrop.

17032 Andover Way

Sold 3/22/06 for 612K
For sale now 299K

50% off the peak is here. Whose tag line is that?

This also set the new baseline for the valley 100$/ sq foot.

Diggin Deeper said...

"50% off the peak is here. Whose tag line is that?

This also set the new baseline for the valley 100$/ sq foot."

How low will it go?????????????

Anonymous said...

Josh Marone paid $529,000 for his Lincoln home two years ago and spent another $130,000 on improvements. The home is for sale for $525,000 so that Marone and his wife can build a new one in Loomis. Marone said it's amazing so many homes for sale are sitting empty.

Unless this guy have millions to piss away, why would he go and buy again, probably still overvalued, in Loomis after spending $700K just 2 years ago? Maybe his wife is nagging him to do it. Might be the dumbest RE move of the year. Maybe we should nominate candidates and vote on the winner for 2007?

Cmyst said...

Yeah, the Marone story puzzled me, too. If you like the house you've got so much, and the town you're living in, why sell? He already lost, by his account, 134K. How on Earth can he afford to build another house, and again -- WHY?? These young couples all promoting this notion of "growing up" together over the years in this happy, sappy neighborhood -- but none of them seem to be actually staying there, and they're puzzled that no one else wants to fall for this crap??

Perfect Storm said...

Were right on track for a 50% decline by 2009.

Perfect Storm said...

Milken researchers said that though foreclosure rates differed among 29 mortgage products studied, all could lead to foreclosure.

According to the data, about 84 percent of prime originations in the past eight years were 30-year fixed-rate mortgages, compared to just 44 percent of subprime originations.

But the Milken Institute noted that while hybrid mortgages accounted for 36 percent of subprime foreclosures, fixed-rate loans weren’t far behind with a 31 percent share.

And of all prime foreclosures, a staggering 74 percent were tied to 30-year fixed mortgages, with hybrids and ARMs accounting for less than 21 percent.

To further justify that research, the group found that over 50% of the subprime 2/28 adjustable-rate mortgages in foreclosure during July were less than two years old, and had not yet reset to a higher interest rate.

smf said...

Why is anyone surprised at the foreclosure problem, even with higher income individuals?

I mean, at the peak, even with a high income, a 'decent' house would have set us back at least $800K. There is no loan product out there that would have made that house affordable for us in the long term. But we know of several people who got into these types of loans.


Greed and financial stupidity.

Even with the prices down as far as they have gone now, they are not really even close to becoming really affordable.

Diggin Deeper said...

People can't afford homes because wages have not kept pace with inflation. The PPI and CPI have been fudged for so long with sub 3% inflation, that most people getting a 4-5%% raise each year are net negative when everything is added up. As real wages keep falling (inflation considered), home prices have to follow or will be looking at modern day ghost towns. The financial stupidity in this country started at the top and too many people never questioned the undertones that are now bringing the market down.

Cmyst said...


and it's getting to the point where they don't even keep the "data" straight in the same article. I was reading one a few days ago where at one point it stated that incomes had dropped, and in another it stated that incomes went up. It was talking about average incomes of average people.
And they wonder why we've lost faith in the old media!
This credit crunch is not due to liquidity problems, it's due to people at the top who no longer trust one another, and with dubious statistics like they try to feed the public you can see why they don't trust each other.

sacramentia said...

"And of all prime foreclosures, a staggering 74 percent were tied to 30-year fixed mortgages, with hybrids and ARMs accounting for less than 21 percent."

This is opposite of what all the media hype is about how ARMs are causing the problem. Assuming the borrower has some financial discipline (which may be a bad assumption), an ARM or hybrid would allow you to remain solvent longer than a 30yr fix loan.

A 30yr fix rate makes the lender take all the interest rate risk, where a variable rate with a reasonable margin shares the risk. Over time, the second should save the borrower money. But when the average person hears this logic, they hear "I can afford more because it will save me money to get an ARM and then takes on too much debt" Instead of ..."I need to leave a buffer to absorb the interest rate fluctuations and not borrow more than I otherwise could using a fixed rate product."

I'm just really getting tired of all the bad press on the exotic products since they are useful tools when used properly.

Gwynster said...


Forget the hype. People severely extended themselves across all types of financing and now that sales and HELOC won't cover the losses, it's all coming home to roost.

I also call BS on the Yolo article. Sure we lots coming off the market. We're getting a few sales but a lot of it either comes back onto the MLS as a REO or it becomes a rental. The people who bought REOs last year to flip are getting hammered. It's kinda fun to watch >; )

Diggin Deeper said...


Agree completely...We've played this shell game for so long, and the general public has become so gullible, that when a real problem surfaces, everyone seems blindsided by it. Kind of like modern medicine. Just treat the symptoms and forget about the root cause.

One of these days the Fed's going to lower interest rates and bonds are going to drop like a stone. Interest rates will rise to fight off the true inflation that's festered and accumulated for years, all because the data was skewed to drive public opinion in direction it shouldn't have gone.

As far as liquidity is concerned, every report I follow says its more a solvency problem than anything else. Major banks cannot withstand the financial shocks that their voodoo risk management has created for them. If you reliquish sound fiscal policy and risk management to Wall St., and not to the traditional banks, they're going to pick your pocket before it's over. Witness Goldman Sachs...create mark to model CDO's and SIV's, sell them to anyone who'll buy, then short the hell out them because they knew just how dangerous they were. They walk away Wall St darlings, and leave a pile of rubble in their wake.

Before this is over, imho, a major financial will go down or get bought out by some foreign concern.

Diggin Deeper said...

"Sure we lots coming off the market. We're getting a few sales but a lot of it either comes back onto the MLS as a REO or it becomes a rental."

That's's the same shell game...I liken it to the unemployment number trick we've all gotten used to. Those that have quit looking for a job aren't counted anymore, therefore they don't exist.

Cow_tipping said...

2007 was the year of the real estate bust - Merced Sun-Star

Yea, you freaking wish.
2007 will be known as the good old days in 2008, and then 2008 will be the good old days in 2009 and so on.
Merced is a looooooong way from being a 300K town, it was a 100K town all its life, and at 100K it was over priced. UC Merced isn't going to make it into the next SFO. Commute to the BA isn't getting any shorter, and if they do invent the transporter technology to make the commute shorter, heck people will live where they wont have to smell cow dung all the time, like maybe Italy and commute to SF in seconds.

Cow_tipping said...

Diggin Deeper said...
"50% off the peak is here. Whose tag line is that?

I believe I was at one time looking for a 50% off in the
I still see only a 49.9 there, that is a sacramento site, and that 49.9% off house is 1350 sqft and 169K. I am now I believe looking for 75%. BTW, that house was sold last May 2006. It lose 50% from then ??? also it has 604 days on maket.
Here is the cut/paste from flippersintrouble.
5260 Eden View Dr
Sacramento, CA 95823 Total Loss: $169,100 Percent Loss: 49.9%
Asking Price: $169,900
Bedrooms:4 Baths: 2 Sq. feet:1360
Listing History:
Down 49.3% from $335,000 On 2006-04-27
Down 57.0% from $395,000 On 2006-10-14

Days on market: 604
# of Times Listed: 4

Previous Sales:
Sold on 2006-05-03 for $339,000

MLS# 70102304 Google Maps
Assessed Value Property Tax Bill

Anyway, Its listing total time on market for that address I think.
OK so 50% loss in 17 months. 170K loss, AKA 10K a month. Nice.

SacramentoCrash said...

Believing that median price like believing in the tooth fairy and Santa Claus

Believing that median price movements indicate the actual trend of market valuation on a property specific basis is like believing in the tooth fairy and Santa Claus.

Sounds like someone needs to take a course in basic statistics.

Median price is only the price of the item that falls in the middle of a population of sample items.

What could be happening in Land Park, Midtown and East Sac is that a greater number of houses purchased during the bubble came on market because the sellers had to get out from under a pending payment adjustment. That is why the median went up.

Short sales (selling for less than what you paid) of higher priced properties could skew the median price figures upwards even though the actual market prices of properties have declined.

Brokers, "sales consultants", "mortgage strategists" and reporters focus too much on median prices.
They need to look at market valuation of a specific pool of sample properties to determine exactly where the market has moved

SacramentoCrash said...

Shows how crappy the economy has become when there are sites in the open that abet fraud.

The whole friggin house of cards will probably tumble in 2009 / 2010.

SacramentoCrash said...

What ever happened to Mr. Happy, the guy in Rocklin with the expensive backyard living room?

How about all those mortgage whores err, mortgage professionals?

Probably learning the line: "would you like to supersize your order?".

BMac said...

I believe it is 'perfect storm' who said....

We're right on track for a 50% decline by 2009.

If you say it just right, its got a beautiful ring to it.

Of course there are anecdotal cases that are right around that 50% number already (a $325k 800 sq. ft. cottage in Oak Park? ROFLMAO). I think PS (and I) are waiting for the true 'median'-ish house to come down 50%.... I guess that's about $200k in Sacatomato.

Diggin Deeper said...

50% is a huge drop from the top...taking an additional 100% appreciation just to get even, thereafter. But the fact that most people cannot afford to buy what they want, at the prices posted, leads me to believe that we're not done at the 50% level. Until we get out from underneath the debt we've created, it's hard to imagine this market moving anywhere but down or sideways for a very long time. Throw in a $14 Billion state govt deficit, and you can let your imagination take it from there.

There's an opportunity here for the area to prepare for an upswing sometime down the road. Cheap homes, low priced labor, and plenty of land give Sacramento a perfect situation for growth. It would take a visionary to see that what we have today is a perfect recipe for business innovation, development, and job growth. Instead most will focus on the "perfect storm" that real estate has become.

Jacob said...

There is no job growth and no incentives for business (that would pay really high salaries)to move in.

Prices can come down 50%, then they can come down 50% again. Its all supply and demand. There are way too many homes for sale at any price.

Not to mention all the brokers, realtors, appraisers, construction workers etc. that have or will lose their jobs. Just adds more foreclosures for banks or more people desperate to sell at any price.

And then we have actions for 100s or 1000s of homes at 50% of the owed balance and no bites. Even at 50% off the banks can't unload them.

Average income is 50k so average priced homes need to be 150k, which also means that that is the median, not the minimum so there should be plenty of homes at 100k.

SacramentoCrash said...

What were the properties worth in 2002?

That is what they are worth now.

waiting_for_the_fall said...

I've been tracking homes in the Roseville/Rocklin area for several years. In 2005, I couldn't find even one home for under 300k.
Now, there are many in the low 200ks. Most of the lowest priced homes are bank owned.

What do you think will happen to the comps when they sell? If the neighbors thought they had alot of equity in their home, it will fly out the window when the bank owned homes sell.

I think a 50% decline is not low enough, because the fraud and speculation was higher in some areas than others.

Has the biggest price drop happened yet? I don't think so...

Cmyst said...

Here's a nice roundup of the factors coming to play in the economy, written by a well-respected economics poster at the Daily Kos site. Which, btw, is how I found the bubble blog sites in the first place.

When he first started posting the so-called "doom and gloom" diaries, he got a lot of flack for it.
Not so much anymore.

Perfect Storm said...

I think a 50% decline is not low enough, because the fraud and speculation was higher in some areas than others.

That is what I have been saying for more than three years now. The fraud is massive, society is just now looking at the housing fraud bubble with the curiousity of a small child, wait until this thing causes massive implications to our economy. Our society has hit a sad state of affairs when the mortgage industry could gain some much in bogus profits for a bunch of uneducated criminals.

Going through life fat, dumb and loaning money in a fraudlent manner is no way to go through life.

Were right on track for a 50% decline by 2009.

ralphk said...

J6P has a short memory. We went from a tech bubble to a housing bubble a decade of false wealth based on speculation without substance. Wages have not kept pace with real inflation for over a decade. That fact has been hidden by the government and the bubbles. The growing gap was bridged by debt.

It will soon become obvious (and impossible to disquise) to all that we're in deep trouble and nothing but another bubble or a major correction in prices and/or increase wages will fix this mess.

paranoid renter said...

It will soon become obvious (and impossible to disquise) to all that we're in deep trouble and nothing but another bubble or a major correction in prices and/or increase wages will fix this mess.

There is absolutely no good way to fix this. Rise in wages translates to higher inflation so that doesn't work. Another bubble is possible (actually, I strongly believe healthcare is going to be the next bubble), but that will be short-lived too. Basically, look to third world countries to see where we are headed. The upper class will do well no matter what. The bottom class is screwed no matter what. The middle class wage earners will struggle - some will drop to bottom class (bigger proportion) and some will make it to upper class (smaller proportion) and the struggle will go on forever.

Cmyst said...


What kind of bubble do you see healthcare as producing? I work in the field, and we have anticipated a huge increase in need for years, based on the aging Boomer population.
But that doesn't qualify as a true bubble; it's a fact.

Perfect Storm said...

Hello socialized medicine!

Perfect Storm said...

2007-12-28 —

Indeed, it is silly to point to America's "high" home ownership rate when so much of that rate is due to a rapid increase in recent years precisely because of all the unsound lending. This was "fictitious" homeownership at best, and it says the exact opposite of what a naive read of the statistics would suggest. That is, it says the opposite of what politicians, bankers, and mega-lenders like Mozilo want people to believe: that America has some sort of manifest destiny to have unusually high levels of home ownership, fundamentals be damned.

America is less of an "ownership society" than it has been at perhaps any time---unless you count debt as an "asset" (amazingly, that is what politicians and mainstream economists have been doing). Hopefully one day we will be that ownership society---when we've actually earned it.

Were right on track for a 50% decline by 2009.

Anonymous said...

I don't mean to be the contrarian but this stupid govt is going to bail out all the criminals, fraudsters and other losers who went into debt over their heads at any costs so I really dont think a 50% decline is likely at all.

Perfect Storm said...

Any government bailout thus far has been a joke, what do you suggest they propose use taxpayer funds, that would be political suicide, no the only answer is a price decline of 50% or greater and that is exactly what will happen.

Anonymous said...

You dont understand politics, there are a lot of RE losers out there. Why do you think they won't pull the mortgage deduction? The politicians will sell out this country to get reelected even if it costs trillions and makes no economic sense. That's politics.

paranoid renter said...


The bubble I see is one where there are too many jobs created in healthcare and auxiliary industries. So the way I see this playing out:
- Lots of nurse positions; nurse salaries go up marginally. Nursing schools make out like bandits.
- Doctors salaries skyrocket and they start switching jobs like crazy to take advantage of pay hikes.
- Artificial shortages of drugs drive up prices of drugs and help the pharmaceutical industry report record profit.
- Lots of administrative positions created ("director of customer care for the hospital", etc.) and tons of bureaucracy in billing and hospital management. [For the record, my insurance/billing is not yet complete for a blood test I had last March!]. Errors in billing (usually amounting to overbilling) will proliferate.
- Insurance will cover less and charge more resulting in record profits for insurers.

Cmyst said...

PR, and anyone else who wants an insiders' take on healthcare in this country/state -- I will post something on my blog this evening.

SacramentoCrash said...

"Stupid is as stupid does"

"People went to the bank and got a loan on the increase in the price of their home. They went out and spent all that money," he explains.

"Price of the home went up again, they went back to the bank and got another loan. They went out again and spent that money on cars and jewellery and furniture - whatever they wanted."

With the help of the banks, Mr Carrigan says, people in Stockton "spent their house".

SacramentoCrash said...

More "Stupid is as Stupid Does"

From the Bee about Mr. Yayhoo Redneck Borrower:

$50-60k in consumer debt is typical.One borrower had $130k in Credit card debt. We pay it all off for you in escrow and you run it back up in two years, but now there's no where to turn this time is there? You know what's pathetic? Pulling up to my office in a $60,000 lifted Ford/Dodge/Chevy truck with $800/mo payment which is more than your annual salary. That and the boat with the wake tower. We get that the combined payments and insurance are $1200/mo and shake our heads. I know that you BS your family and buddies, but I see your credit report and bank balances. You tell me the truth. You really only have $1200 in cash/savings. It doesn't matter though, because you desperately need to keep the lifestyle charade going

Yeeehaw!!! Toys for Big Boys!

SacramentoCrash said...

Even more "Stupid is as stupid does" from Sac Bee article on Lincoln and the goofball with the $130,000 backyard.

Back to Lincoln. I guess I'm a little bias. I had some friends move there a few years back and they paid 450K for the place (standard tract home...nothing special). They continued to tap their equity for a car (Mercedes), spa, plasma TV, etc., etc...basically a bunch of stuff they didn't need and now they are struggling to make the 1st and 2nd mortgage payments."

One word:


sacramentia said...

From Marketwatch:

"For all of 2007, announced layoffs fell 8.5% to 768,264, the lowest since the recession year of 2001.
The report comes one day before the Labor Department reports on nonfarm payroll growth for December. Analysts surveyed by MarketWatch expect a modest 58,000 gain. See Economic Calendar.
"The housing slump has failed to translate into widespread job cuts outside of the financial sector," said John Challenger, chief executive of the employment company that bears his name. "We did not even see the typical spike in fourth-quarter job cuts."

Gwynster said...

Good to see you're still with us Sippin