San Diego Housing Bubble News and Analysis

Been hittin' the expresso today, Contraman?

Just kidding.

If it's any consolation, there are a lot of people who HAVEN'T forgotten about personal responsibility and who HAVEN'T gotten themselves in too deep. The 70% of buyers who used these toxic financing options in the 2003-2006 period does include a small percentage of individuals for whom that really was a reasonable option, as well as some folks who are both willing and able to live with their mistakes. These people are not part of the problem.

There is no financial literacy test for obtaining a mortgage, and if there was a lot of people, including some who are very responsible, would flunk it. Like it or not, some people have to rely on getting good advice from their professional service providers.

Suffice it to say that the maxim - you can't cheat an honest man - is true for the most part. But's it's also true that securities brokers can't get away with doing some of the things our realty brokers, mortgage lenders and appraisers have been doing for the last few years. There is an element of the public interest involved, above and beyond the personal accountability aspect of this problem.

"..people not wanting to take responsibility for their actions. Period."

I would say that hits the nail on the head.....

And I am sick of it too.

rs

Personal responsibility? How dare you speak contrary to "the what we are entitled to".
Contraman sounds like some sort of a neocon fascist. How do you spend your evenings? Tasering your children and watching them twitch? Spend your weekends oppressing women and "minorities"? Vacations clubbing baby seals?

I concur with your diatribe and of course the comments above are entirely tongue in cheek.

"we need an "economic crash" to reset our value system and remind people what is most important in life."

Wow Contraman!

I see political attention focussing on this still incipient crisis. Hillary Clinton shed some crocodile tears on the fate of all the poor borrowers, there were segments on NPR/PBS radio & TV. Even President Bush spoke rationally on the topic - No bailout, no increasing GSE limits/purrchases.

Global liquidity is getting squeezed. Europeans are crying uncle. Their central bank injected $130B to prevent a run. (Fed injected only $10B so far). Since US needs to borrow $2B per day to keep going, this is going to get very expensive soon.

I think this may turn worse than S & L crisis. Significant recession/stagflation seems all but certain. It is starting to look like late 1970s/early '80s rather than late 80s.

Contraman is going to get his wishes. But it will be very ugly. In the end, he will be liking to retract his wishes!

Contraman,
Very, very well said! Thank you.

Although I find the thought of an economic crash somewhat frightening (fear of the unknown), I too tend to believe that we need one to "reset peoples value systems".

It's almost like watching a drug addict's rapid decline and knowing that not until they hit bottom will they admit they have a problem that needs correcting.

i have friends who are liberal democrats. They are well educated. They do not approve of this irresponsible behavior by home buyers.

Well you only get taxed on your earnings. And all these "dumb" people have created nothing but opportunity after opportunity to make money. If you are so sure of a "value crisis" then put your money where your mouth is.

God bless them "dumb" people. :)

I suppose Bush could say that about buyers to set us up to feel sorry for their "ignorance" about what they were getting into. Add that to the RE CEOs not having a clue either. I don't think either is believable. Buyers banked on an upward trend w/o understanding the risk - maybe. But RE CEOs...their qualifications are sorely lacking if they couldn't see what was being set up. What use is a CEO who so clearly lacks knowledge and leadership? This is a masquerade to cry to the GOV to float the whole mess, and pay for their big hysteria party.

"Housing market collapse should not surprise anyone
Some industry leaders turn a blind eye to past trends"
By RACHEL BECK, (AP)
NEW YORK - "Century 21 Real Estate CEO Thomas Kunz may have unintentionally hit the nail on the head when he declared that a "pity party" is gripping the housing industry right now.
Many recent home buyers are expressing shock that their properties might be worth a lot less than when they bought them. CEOs like Countrywide Financial Corp.'s Angelo Mozilo are claiming that "nobody saw" the deterioration of real estate values coming, and are pointing fingers at others for causing this mess. And Wall Street seems to only now be waking up to the implications of mortgage securities imploding."

FROM: http://www.theeagle.com/stories/080507/b...

Bob: I had friends who were liberal democrats, too! But I shot them all and buried them in my backyard!

Kidding. However, one issue that really needs to be dealt with in this country is the absolute lack of leadership from either the Republicans or the Democrats regarding fiscal policy and restraint. Greenspan (and now Bernanke) and the FED have been running this country for 18+ years with literally no meaningful oversight from either the President or Congress.

No one on either side of the aisle in Congress or in the Executive Office wants to cowboy up and tell the American people some hard truths: We have pissed away our economic independence through truly bad monetary decisions, we are no longer a creditor nation, we are no longer a manufacturing powerhouse and we have progressively destroyed the middle class over the last thirty years.

This is the "third rail" of American politics and, with the exception of Ron Paul in the recent debates, not one candidate in either party has had the stones to step up and speak the truth.

While I count myself as a conservative Republican, their behavior has been just as unconscionable and reprehensible as the Dems.

This country truly needs an enema (economically speaking) and the average American needs to understand that sometimes not every one of your avaricious little whims is going to be met and your egocentric, narcissistic little life comes with both costs and responsibilities.

2008 will not be low-turnout election year. If this economic crisis reaches its peak by summer 2008, it will be one whopper of change election. At least those feeling bad about low turnouts in elections can celebrate!

I agree, everyone wanted to have a piece of the money pie. No risk involved, no losing, a sure bet!

It's a shame that people think they can just toss in some money and if they lose cry wolf.

To get rich you have to accept risk, one of them is becoming poor instead.

Allan, Very well said. The example should start from the top down in the governement and in the family.

Once again, we need an "economic reset" here. Maybe if we piss off China enough "who unknown to 99% of americans literally has our economy by the proverbial balls" and controls us like a puppet on strings this will happen sooner than later....

Others in this post say, I will be retracting my wishes when the hammer falls. Not so. I live a simple life and don't need anything else. I don't buy designer clothes to try to fit in with society and be a clone (hence the nickname contraman). Last time I checked, a polo tshirt and a walmart tshirt are both made of cotton. I won't pay $25.00 more for a logo of some dumb ass on a horse with a stick so I can fit into San Diego culture and be "cool".

To be honest, since I stopped growing about 15 years ago, I rarely even buy any clothes. Don't need them as I don't get caught up in fashion trends. A few pairs of pants and shirts suit me just fine.

I don't buy expensive watches because the timex I have had from 10 years ago that cost $25.00 and my buddies $20,000 yachtmaster serve the same purpose, they tell the time. If I lose it, I don't care, he lost his water skiing a few weeks ago. You think he is pissed and stressed?

My car is paid free and clear because I saved money and drove "less desirable" cars until I could ACTUALLY AFFORD the one I have. Stellar concept.

I have no consumer debt and I bought furniture along time ago as I could AFFORD IT and purchased most of it at Jerome's because a couch there vs. one at some fancy place serve the same purpose, me sitting on it. If my freinds don't like the style, they can by me a fancy one, or they can find someone else to be friends with, I am not going to get sucked into the debt vortex.

Don't need fancy TV's and anything else....I am content.

I don't need a NEW KITCHEN or a NEW CAR or any other material thing and have been saving since I was 15 and living a SIMPLE NON-MATERIALISTIC lifestyle.

This is why I say a reset of values is needed, because we are spoiled materialistic crybabies in this country who value the wrong things.

Young people should take 5 people to lunch within the next week who lived during the "Great Depression" and see how good we have it...and then visit a third world country for a month.....no clue.....

Sincerely,

Contraman

Contraryman, You are wrong on so many levels its not even funny. first of all the lenders are part to blame. Some schmoe pulls up in a beatup dump truck asking for a million dollar loan and says he will do no doc and the lender gives him a quick wink and signs the money away. This happened way too often.
Only in America will a bank give you a million dollar loan without any proof of employment or income. Blame your country and not the people in it.
I also like to blame the media. Growing up there wasn't 50 reality shows showing you how easy it is to flip, how to make a quick dime in real estate ....
A lot of people got caught in the glitz and glamor and the banks reeled them all in and gave billions away. The banks by far are some of the biggest organized crooks in the history of this country.

People are also to blame as well. They don't deserve a free pass.

EDIT: I laughed when I saw a headline that Bush was giving a speech on the economy. He is the crook in chief for all of these companies that made billions on this real estate run.

Sorry - hate to be a contrarian here, or perhaps I'll just play devil's advocate.

First of all - understand, that I take personal responsibility to an absolute level... I am FULLY responsible for my own actions and thats my credo. But I have had the benefit of education, intelligence, and a career in business as a leader, not one of the 'downtrodden workers!'.

The American consumer is playing in a rigged game. You claim that people have only themselves to blame, but they are the product of marketing and conmanship... (Is that a word?). Take a very hard working assembly guy. Sober most of the time, gets to work on time, plays with his kids, watches TV. He is pounded from all sides by a constant blare of low interest rates, you must act quickly, you will be priced out of market forever, rates will never be this low, trust us - we are the most honest and honorable company, look how much money your neighbors all are making, don't worry if the paperwork doesn't match our promises, they are complex documents and if you don't sign you lose your deposit (and your house - which by the way will be more expensive if you start all over.)...

It's not greed. That should be reserved for the folks who gave their credit out for the purchase of 5 houses in their name.... Most of the people who are going to be smacked in the meltdown weren't speculating that they would get rich from their ownership, that was just a potential side benefit.

A salesman's job is to put people in pain. But the most pernicious group of savage money stealers have been lying to people who, by all accounts, don't really understand economics, interest rates, economic cycles, or many of the other things that someone needs to make an informed decision.

By the time some of these slick Real estate LIARS, mortgage LIARS, investment counselor LIARS, TV Advertisement LIARS, government policy makers (You Mr. Greenspan), and anyone else making Ferrari buying money (p.s. It was never the case that Realtors could live in the neighborhoods they sold, now they live in the neighborhoods above the stuff they sell! - of course 90% of them will be looking for work soon....) got through with the general consumer the game was over.

Hey - my core values agree with all of the posters in this thread. And I am NOT interested in bailing anyone out (except by a 10 year tax on the real estate agents, mortgage agencies, and a whopping payback by the wall street crowd) but lets try to realize that it's very, very hard to resist this kind of assault.

A lot of what is going on right now is "I told you so", and "Look - I didn't get taken - so you are an idiot".... But our ENTIRE culture is based on marketing crap to people which they don't need. It also is the driving force in our economy. A bunch of hucksters took the rubes for all their dough! But don't come down too harshly on the rubes.

If I had a 11th grade education, made 30K per year, and was constantly barraged by very, very, VERY sophisticated folks who's job was to get me to sign, and I saw the opportunity to own a home (and with it the ABSOLUTE promise that it would only increase in value), I would have signed too. If I was middle class and made 90K and saw that prices were going up every year and that soon, very soon I would NEVER be able to buy (I would be priced out), I would have bought as well... Not for greed, but just to be able to keep my kids and family in a nice neighborhood.

This market wasn't created by greedy people looking to get rich, it was created by an incredibly greedy real estate cartel of Realtors, Mortgage brokers, Wall street finance cheaters, and our government looking for short term success to be reelected. Not by the vast majority of the buyers.

Just my 2 cents.... Don't be so hard on the little guy.

8 Steps to making the right mortgage decision.

1) Get a library card and FIND AND MAKE TIME to be responsible for you and the well being of your family. Red, yellow, black, white, rich, poor, middle, low, or upper class. If you can read and walk you are qualified here.

2) Go to the sections that have books on how to manage your finances, real estate, investing, how to budget, how to DELAY THE GRATIFICATION of things in life, types of mortgages, anything having to do with these subjects and check them out for FREE!

3) Turn the TV off and do a TV fast for 30 days. The time you would have spent WASTING TIME watching TV shows that won't help you plan to put your kids through college and the SLICK NO COST MARKETING ADS FROM COUNTRYWIDE you can spend READING THE BOOKS FROM THE LIBRARY.

4) Now take all this knowledge that you have accumulated over the 30 days and put it to use and use it in such a way to not get taken advantage of anymore by liars, slicksters, the govt, American Express, or your lender.

5) Never do RE business with friends and family. It never works, and there is always assumptions and misunderstandings and obligations involved.

6) Quit blaming people for your problems. Take responsibility,learn from mistakes, build character and integrity, and teach others who are younger than you the same.

7) Get a financial calculator. Use it. If you are spending more than you are earning, this will become a problem soon...

8) If you can't afford it, THEN DON'T BUY IT!

Sincerely, Contraman

Excellent advice. One more piece - think carefully about every possible scenario that could happen in future, including -

you or your spouse losing your job
divorce
having children
emergency medical situations

and, the possibility that your home could go down in value. Contrary to the opinion of a few on this board, it is NOT OK to just walk or mail in the keys if things don't "go right." This is a binding contract and there is no weasel clause on your end. Blaming the lender and saying it is "their fault" is a child's response to an adult situation.

If you are confident that you can handle life changes and are not looking at a home purchase as something that can ONLY go up - and you have done your homework - then proceed.

Maybe in OZ Contraman....

Look - I agree with you - those are very altruistic goals... But unfortunately you aren't dealing with people who have had those values, goals, or level of self control. You are dealing with people who have lived their lives on the edge, from the guy making 25K to the guy making 250K.

The American consumer has been turned into a spending machine which has created this playboy mentality. It's what made our economy what it is. Look at conservative countries... Their unemployment is high, taxes are larger, and have bad economies. They don't spend. So when the spending machines get conned, don't expect them to stop watching American Idol and get a library card.

You play the hand you are dealt.

I read about Serpico (the cop from NY)... He grew up in a family which if you couldn't pay cash for it, you don't buy it. I think that's admirable. But it also wouldn't have created the economy which paid his salary.

I would love it if the US Consumer was educated and we started saving. Of course in the current economy that would effectively destroy our economy. (The consumer spends 70% of the money in this society, if they even spent 10% less it would drive us into a depression).

Anyway - smart people will make smart decisions, the vast number of smart but non-thinking people and not smart, not educated people will do what the marketers tell them to.... Sorry... Thats reality.

........................BINGO!!!

It's coming. I'm sure that by now, everyone who reads internet news sites has seen the story about France's largest bank by market value, who announced today that one of its units was suspending three of its asset-backed securities funds, saying it could not value them accurately because of problems in the U.S. subprime mortgage market.

Today, the Dow dropped 387 points due directly to the this big, credit problem that is looming over these bubble markets.

It's not going to get better over-night.................My opinion is that it's going to go further & further down in chunks for the next three to five years before it stabilizes. I know that I won't be buying any real estate in any of the bubble markets until I am convinced that the mud on the bottom has settled.

There are indeed exceptions to my points here, obviously, when people have emergencies they were not planning on it throws a kink in things, this is life, and happens to us all at one time or another. I am not addressing these instances, but rather the ones where people don't take the time to be responsible for themselves and their family concerning mortgages and home ownership.

All people know where I library is located and if they don't want to be screwed BAD ENOUGH then walk there and get educated and make a wise decision. It is up to you!

THERE ARE NO EXCUSES AND YOU CAN POST TO THIS THREAD ALL YOUR LIFE AND WON'T CONVINCE ME OTHERWISE.

Maybe I should market and sell debt pills and when you take them your debt automatically disappears! Or maybe, I should get up and go to the gym every day and not consume more calories than I burn......oh, that takes work, effort, and commitment...VALUES.....

Sincerely, Contraman

"where people don't take the time to be responsible for themselves and their family concerning mortgages and home ownership"

Do you think that the vast, vast majority of these people didn't obsess over every single part of their buying experience? That they didn't lose sleep every second before they pulled the trigger? This scared the crap out of them, and they were fleeced. You expect a lot out of people who would have no idea what you are talking about.

People get their news and info from whoever is selling to them .... Thats the way it works. It takes a lot for people to pull themselves up by their bootstraps.

Anyway - I don't disagree on what people should do, I just disagree that it's that easy to expect a large number of them to do it.

What kind of jackass goes water skiing with a $20,000 watch on his wrist? We REALLY do need a change of values around here.

From Katrina victims wondering where their handout is, to FBs playing the victim card, to everyone and their dog selling their soul to every get rich quick vendor in sight, to Barry Bonds cheating his way to an all time record, Americans have lost the spirit that used to make this country so great. That is, we USED to work hard, save up, take risks and accept the consequences if our endeavors failed. We USED to do things for ourselves, instead of collectively holding our hands out, looking for someone else to do things for us. Nowadays we just want to know what the government will do to eliminate the effects of our own laziness and bad decisions.

Wasn't it Jimmy Carter who once said that for the first time in America's history, the majority of Americans think the next four years will be worse than the last four years? Man, our next four years (and the forty after that) are going to be rough.

Amen, brother kick save, preach the good word! Could not agree more....

And give me an offering and God will make you rich too! hahahahahaha....

Sincerely, Contraman

I laughed when I saw a headline that Bush was giving a speech on the economy. He is the crook in chief for all of these companies that made billions on this real estate run.

Yeah, but what he doesn't know is that he got sold the biggest ARM in the world.

Guys,

Contraman works for the library, that's why he keeps asking us to go there.

Please be careful he may have a scam hidden in those mortgage books somewhere.....

Anyway, watch out for library fines, they always find a way to get money out of your pocket.

If you take Cyphire's argument one step further, you must also ask how qualified is the average person to vote for a government to run his or her country. If the government fails you, and you voted for it, are you going to take responsibility for your actions? Or are you going to blame the politicians? Who was to blame for Katrina, the weather forecasters, the city planners, or the hurricane? Or just the stupid people who didn't bother going to the library? If people can see the jackboot, they generally don't wait around to be kicked in the ass.

Very nice rant Contraman! In my circle of friends I’ve been calling it “The great cleansing”

Regards,

Reading that felt good, contraman. Your lifestyle and mine sound very similar. I spend about 10% of my income, and plan to buy a home for cash that's less than 10% of my assets.

I am amused by all the people who agree with you, but want just a little more accommodation for the poor victims of ignorance and stupidity. Your point is that there's already been way too much accommodation.

We have one drop of genuine victimhood in a giant vat of greed, and the leveraged average Joe and Jane buyers of appreciating assets and consumer goods are just as guilty as everyone else. It doesn't take a genius to see that being given a house and keeping the upside if it appreciates and walking away if it depreciates is an unsupportable freebie. Taking it was legal, but I consider it an abdication of one's social responsibilities. If you just wanted a home for yourself and your family, renting was always an option, so everyone who bought instead made a conscious choice, and weren't forced into it at all.

Patient renter in OC

CDMA ENG...

Contraman in '08!

I think he is on to something.

"It IS your fault" is a lesson that my parent's taught me and I'm only 37. All these people making these kind of mistakes were taught these lessons from the baby boomers parents. They were of the "old school" philosphies! Pay Cash. You really don't need it. A penny saved is a penny earned and all that stuff. So what happened along the way?

One of my grandfather's died with over a million in cash. The other will with over a million in assest.

Neither of these men EVER made more money together than I make now in a single year.

They knew something our generation, and the next, doesn't.

Just my rant...

Take care Piggys (yes I mean Piggintonians)

Sure, contraman is on to something.

I agree with the old school philosophies (and I'm a proud liberal). Don't buy it if you can't afford it. The house is would be the only purchase one should borrow money for. Even then, families are getting smaller so children who inherit houses would not even need mortgages to pay for housing.

But cyphire is right. We have the economy we have because we spend. The big problem is that we have outsourced everything so the money is going overseas. If the foreigners don't lend that money back to you, then we're in deep doo doo.

Personally, I'm not helping the economy because I don't buy anything since I don't need anything.

However, you won't see me dead in a Jerome's store. I would rather buy used from Craigslist than new at Jerome's. Do like the Dutch do. They have small tidy homes free and clear of junk. If you buy a sofa, buy a nice one and keep it forever. Americans buy mostly useless junk that they replace every year (but that makes the economy go round).

CDMA and Gang,

I hate to disappoint everyone here but I would make a terrible politician as I don't practice the habits of lying to people to get a vote, taking bribes and payoffs from special interest groups, and flattering and kissing people's asses every day. I call a spade a spade and I value my name above any amount of riches.

A few things here on the threads posted above and below. The Katrina comparison to the morrgage dilemna is a faulty one. It is not even apples to oranges here.

I would certainly agree that the government was lax in their anticipation of this type of event and did not prepare accordingly on some levels. In this case, I feel they should step in and help people in a VERY MONITORED AND ORGANIZED FASHION which they never do...hence the "fleecing of America" stories on the nightly news.

These people had very little control over A HURRICANE STORM and the effects it could have on them. They were warned by the media in the days before the storm to evacuate the area. Some made the decision to do that, some stayed and reaped the conseqences physically, and others?

These people did not sign papers to allow the storm to ravage their home. Big Difference.

All this being said, it is very sad what has happened there and the poor follow up that is taking place to help these people.

The point I am trying to make here is that people have been living way above their means for the last decade and the materialism of this country and the striving to get rich is out of control, hence, the need to reset the values.

AMEX can give me a line of credit, that doesn't mean that I have to CHOOSE to max it out.

Bank you name it, can offer me a negative amortizing loan to purchase a home that I only use 50% of, but I can CHOOSE not to put myself and family in this situation.

Anyone can give you the gun, you CHOOSE to pull the trigger.

Here is the word of the day "DOWNSIZE".

Sincerely, Contraman