San Diego Housing Bubble News and Analysis

Yeah, but it is not genuine wealth.

Real loss in wealth is what has hit bank shareholder whereby dividends per have have been slashed.

A landlord by contrast is still getting his rents, even if the price of the apartment has fallen by half.

A home owner is still getting the benefits of living in his house whether or not it rises or falls in value.

The only people really hit is the housing sector are those forced out because their debt service rises to affordable levels.

In the depression the income generation ability of business was damaged beyond belief. You can't compare a house price adjustment with that.

Please tell this to my mom whom I advised not to buy in 2005. She has not spoken to me since.

Desmond,

I pity your mom. I have a friend at work who bought in mid 2005 against my advice. He paid $900K and put 20% down. Now he wants to sell due to a job change, but he's delusional. He has lowered his wishing price to $800K but even better houses than his are selling in the low $700s. So, the house now sits empty. With HOA, property tax, insurance, etc., his monthly expense is close to $5,000 (pre-tax).

He listed the house as a rental for $3500 but no one wants it. He has lowered his wishing rent to $3300, and I heard that another co-worker has offered him $3000.

Bitter owners, throwing money away on mortgage payments! This guy has lost more than his $180K down payment, and will probably lose more over the next 18-24 months. Of course, I never say "I told you so."

Submitted by desmond on April 30, 2008 - 11:43am.

Please tell this to my mom whom I advised not to buy in 2005. She has not spoken to me since.

-------

She was building-up your inheritance, you ingrate son!

In all seriousness, she's mad at you for giving her the correct advise? That's why I keep my mouth shut. It's always a lose-lose proposition to give advice.

But you'd think that it's OK to be frank to close family and friends.

But you'd think that it's OK to be frank to close family and friends.

You would think. The worse part is that she bought my brothers house! I will never forget what he said when I told him to sell to somebody else let mom cashout on her sale and rent. "I am giving her the 2004 price" This is the mindset, she is mad at me and not my brother! btw it was a condo in Escondido.

this is a joke, most people have already spent their home equity wealth!

those that haven't well, it was a bubble, it wasn't their wealth unless they materialized it by selling. It was all on paper!

$85,000 out of an average of somewhere near $300,000 they did absolutely nothing to earn except happen to own a house during a housing boom.

Things look like they're falling fast, but I really think we haven't seen the worst yet. But being done by the end of 2008 is a bit optimistic. The housing factors are bad enough to drag things out for 2-3 years. Add to that a recession and stagflation, and 5 years starts to look more likely.

Don't forget though that we bailed out the last recession of the 9/11.com era with this housing bubble. Now that both are empty it's going to be a lot rougher than most people think IMO.

The headline $6 Trillion in wealth is typical sensationlism of MSM. It was never really wealth in the first place.

cooprider: I agree with you. I can see how many non-bubble markets may be at the bottom by the beginning of 2009 but SoCal is likely to see falling prices into 2012 due to overwhelming inventory, large future ARM resets, buyers not being able to qualify for loans, etc etc etc.

All of this is going to put enormous pressure on ALL areas. People who are well entrenched with secure jobs (if there is any such thing, anymore) and real equity in their homes will be o.k. All others (many of whom believe that they are o.k.) need to wise up and take a hard look at their future if they are already or are going to be upside down in their homes and will have to sell due to loss of jobs, divorce, unaffordability due to upcoming ARM reset, etc.

lol "wealth"

Funny you should say 2012 Ex-SD. I came across this table on Mish's Global Economic Trend Analysis in the linked "Other Bubble Bloggers" on the home page. here is the closeup of the chart.

It says this is what RE Futures traders are predicting, but the commentary says forecasting is difficult and we all know what they thought a year ago. If we agree there are more shoes to drop, Nov 2010 is optimistic. I tend to agree that 2012 is more likely. Maybe even 2013, which would be about 7 years. Considering there is absolutely nothing that can offer even a glimmer of hope for housing right now though, that may even be optimistic.

Haha looks like housing is gonna go down forever!

I told my mom in 2005.

Your house which you bought for 140K in 1987 is sellable for a million dollars

Sell this POS, before the whole thing falls apart, and rent a condo.

She hasn't spoken to me since, i figure she has passed on 500K in
possible cash since, and that it will probably drop to
300K by the time the trough hits.

oh well, moms are like that. They value familiar surrounding and sentimentality over money. To her the house doesn't really have a value.

I'm with you. Sell the place and buy it back in a few years. :)

Seven years feast and seven years famine. Does that make Rich Toscano Joseph; albeit a few years late

"She was building-up your inheritance, you ingrate son!"

HAHAHAHAHAA

I suppose debt becomes a liability and can be written off as losses, but how much tangible wealth is actually being lost here? If lunacy had a price on it, you'd be able to buy it in Walmart. But it's not just houses values that are baffling, the whole securitisation (horrible word) of debt that seems to be causing concern. Valuing mortgage backed securities is one thing but their schizophrenic cousin CDO's, dreamed up by researchers with PHDs in maths, confounded everyone. I think we may have seen the last of them.

The story continues in the L.A. Times:
by Peter Viles

Yesterday's post about the possible loss of $6 trillion in housing wealth brought me a small flood of e-mail. One of the most provocative notes came from an old friend in suburban Phoenix who poses the question: How much of that $6-trillion bubble was created by outright fraud?

He writes, "I haven't seen articles surrounding the common fraudulent scheme where mortgage brokers worked with a home appraiser to overvalue homes, then direct owner to sell home to a pre-identified buyer at hundreds of thousands over market value with large kick-back from seller to buyer at closing.

"This happened with great frequency in my former neighborhood just north of Phoenix. In fact, three homes out of six homes on my former street are in foreclosure due to this scheme. An example: I sold my house in Dec. of 06 for $815K (legitimate sale and value at the time at height of price boom). Five months later the same house sold for $1.2 million. The people who bought it from me sold it to an "investor" at the $1.2MM price.

"We bought from builder in '03 for $493K then sold in Dec. '06 for $815K. My buyers never moved in but did remove expensive window coverings, outside landscaping fountain and custom-made iron entrance gate then did the kick-back sale scheme for $1.2MM. Their buyer never moved in either.

"The house is now in foreclosure but was recently listed (while in foreclosure) for $534K. It is now set to go to auction. What I wonder is, do the banks who hold the mortgages know the last buyer received the kick-back? Are they going after the money and prosecuting? This happened all over our community. The buyers would never even move in to the properties. They've been sitting empty for a year and a half with no landscaping and other maintenance being done on these upscale, gated golf community homes. Much of the sky-high valuations in the Phoenix and Scottsdale areas were an illusion as this scheme was rampant."

"What angers me most is that innocent buyers in the neighborhood would have been shown these phony sales as 'comparables' by their Realtor and may have overpaid for a home in a legitimate sale but have now lost a great deal of value as these 'comps' weren't real. I would imagine it took place in California and Nevada as well."

Fascinating note -- and frustrating, too. I've seen no evidence that prosecutors are going after this kind of fraud in any meaningful, systematic way.

The prediction has been pretty correct. Recently, I heard President Obama say $5 trillion in wealth.

The middle and high ends still have a some way to drop.

Can anyone take on this? How long will it take to hit middle and high end to drop atleast another 10%?