San Diego Housing Bubble News and Analysis

Are they seriously going to reduce the principal??!!!!!!

That's it. I'm going to buy a condo tomorrow. I'll pay for a little while and then stop. Someone tell me. What will they do??? After how many months of living there free before they kick me out or renegotiate?

Can't play by the old rules, can't beat them, then join them.

I have had it. I am so sick of this shit.

Welfare babies on Wall Street and Main Street. Heck, even GE needs 60 billion to keep running.

And don't forget, jpinpb, that the "free money" being given to these folks comes from someone who actually has to earn it, save it, and hand it over (in taxes). If you pay a lot of taxes, that big giver would be you.

I pay hundreds of thousands in taxes each year. I have never bought a home, because I didn't think I could afford a decent one and, at the same time, save enough for my future retirement and health expenses. I lived in a small, old apartment while people who saved next to nothing lived in big, new homes.

Now vast amounts of my money are going to be shoveled at people who never bothered to spend less than they earned, or restrict themselves to homes that they could afford with 20-100% downpayments, or rent if that was too much. Meanwhile, I still can't afford a home because all these measures designed to keep these often irresponsible people in 'their' homes are keeping home prices way above what I can afford on a much more responsible standard of affordability.

Barney Frank and Chris Dodd and Chuck Schumer and their co-conspirators (from both parties) will never be justified in my book.

If there's one reassuring light flickering in this collapsing tunnel, it must be that you have the courage and audacity to leave control of the rescue and repair of our economic systems in the hands of the same ass clowns who confidently led you into that tunnel.

That takes guts. Still, I'm not quite sure what the reasoning behind it is. People like Greenspan, Bernanke, Paulson and Gordon Brown have either consistently missed out on a zillion signs that something was going awfully awry, or they have consistently lied to your face.

What makes you think that they will either start recognizing the $800 trillion gorilla now, or that they will all of a sudden begin to tell the truth? Wouldn’t it make sense to quiz them on what exactly it is they know about the matters at hand, and/or hook them up to a polygraph for a while?

Every single member of the power gang will tell everyone willing to listen that none of what is going wrong at the moment could have been foreseen. That is something we know to be a load of bull; yours truly, and many others, have been warning for years that it would come to this. Still, you leave the steering wheel in the hands of a rag tag bunch of incompetent liars. As I said, it’s brave, but I can't figure out how it would be smart too.

And it's of course not just on the level of governments, houses of representatives and central banks that insincere stupidity rules. Every citizen of the western world can be confident to have lost around 30% of their retirement savings at this point at the hand of fund managers. Every town, county and state is losing money fast. Not only through decreasing tax revenues, what's likely to be an even harder blow are the losses through bad investments by fund managers.

The most ironic thing of all will be that while you lose your jobs and your homes, the ass clown gang will either keep theirs or leave with golden handshakes and huge retirement benefits. You might want to think about that, and you might want to stop taking it all lying down.

A large number of clowns knew very well what was going on, and did indeed foresee much of it. The rest are dumb followers. Letting that very group now handle the issues makes you a dumb follower too.

They are spending trillions of dollars of your money on schemes that are guaranteed to fail and misfire; if they had the capacities needed to solve the problems, then there would be no such problems in the first place. It's either that, or they have intentionally designed and caused them. That's the only two options there are.

It's time to look at all the ass clowns through the prism of our legal systems, to hold them accountable for any and all intentional mismanagement of the public's interests. If it turns out they are merely stupid and ignorant, you fire them, since you don't want borderline cuckoos to manage your affairs. If they are not stupid, they've been lying, and should go to jail.

Start out by challenging the claims that none of the mayhem could have been foreseen; we know it could have been, because it was. Start with that, and then take it from there. That is what the judiciary branches of democratic societies are for, and if the laws of the land are not properly applied, there no longer is a democracy. It really is that simple.

Oh, and I have a little math question. The IMF has $200 billion in funds. It uses $2 billion on Iceland’s 300.000 citizens. Pakistan has 175 million people. What's missing in this picture?

Seriously, though, the billions that will go to Pakistan are going to make life very hard over there. The IMF and World Bank mafia is taking over the entire control over the nation's finances, in a version of economic martial law that looks all too familiar to those who know what happened in South America, Asia and Russia in the past five decades. Pakistan will become the new test lab for the disaster doctrine of the world's top ass clowns. You have been warned.
http://theautomaticearth.blogspot.com/

Please...

Anyone who pays HUNDREDS OF THOUSANDS of dollars in taxes EVERY YEAR could afford to buy a house if they wanted to.

Well... sadly I am not surprised. Also if you guys think this is all we will see with these sorts of measures you are SADLY mistaken.

Meandale, I did not pay hundreds of thousands in taxes but I did pay around 75k when I add up all of my state andfederal taxes paid by myself and paid by my S corps and I can promise I cannot afford to buy the home I want to buy. People tend to think SS and Medicare are not taxes... except that they are, and they are effectively doubled when you have a small business.

Not unless you rely on something, meadandale, that is central to the little crisis we're having right now. People thought they could work and 'save' for 10-20 years (after working without saving for another 15-25 years), and then retire with enough to live comfortably until they died, whenever that was.

Saving consisted of borrowing, using a home as collateral, and buying houses and stocks. Usually, the total amount spent on the assets was very little more than the total borrowing, so very little real saving was going on. People were really borrowing to invest at higher returns than the debt. As long as houses and stocks went up by more than the interest rate on their loans, they got "free money" which they considered savings.

I don't assume any of that nonsense. If I work and save for 20 years, and hope to live after retirement for as long as 40 years, then I must save 2/3 of my net after-tax income. If you restrict your spending (of every type) to 1/3 of your after-tax income, it's not so easy / responsible to buy a nice home.

A better use of the money would be to for the government to write relatively low rate (maybe 4.5%) fixed mortgages at 80% LTV to qualifying buyers (owners or investors) over an intermediate time period (e.g., 10 year balloon). This would make homes more affordable for responsible owners as well as investors (who would buy foreclosures or whatever and rent them out). The net effect would be slowing home deprecation and bottoming out at a higher level.

FB's would be shut out but they can always rent or get room mates.

well my point is why should the idiots who can't make the payments stay in their home? Can't the reduced principle be given to a new buyer with better credit instead?

Which cost more? Kicking somebody out surely will not and the taxpayer will be paying for the banks losses anyway.

And so now we've come full circle again. The government is going to bend over backwards and do somersaults to bail out banks, FB and whoever stands in line, so I repeat again, if you can't beat them, join them. If they are going to take my taxpaying dollars to bail people out, but make it harder for me to buy, well, then I'll just get a condo w/an FHA 3% down and then default and get bailed out too.

What can they do? So my credit gets a little tarnished. They're not going to take the house. It is clear that is a last resort and they don't want to do it. They'll let you live in it for a year and still negotiate w/you. It's like Monty Hall and "Let's make a Deal."

It's like a car salesman's pitch, "What can I do to get you in that car today?" What can we do to keep you in the house.

UUUgggggghhhh. This whole thing disgusts me.

I have an S-corp. You don't have to explain taxes to me.

However, you tipped your hand when you said "I cannot afford to buy the home I want to buy".

Everyone can't afford a 3000 sq foot house and a brand new mercedes in the drive way. Does that mean that we just should rent and walk to work?

If you have a beer budget, buy beer.

Relative equilibrium will return to the housing market. As my mentor, sdrealtor, would say "be patient grasshopper".We might look like san Diego then... or we might look like San Francisco... or we might look like Tijuana , but it will work out.

I like this idea. I am also going to seriously consider doing this!

I have been waiting for a long time to purchase, and if this is how the system is going to work, then I am going to work the system...

I'm curious to see how much of this homeowner bailout continues after the election. If it does, I'll be looking to play the system like others. When the rules change to meet the need, you must also change your strategy.

One year ago, if someone suggested that the government would intervene and cut principles to keep people from being foreclosed on, everyone here would have called that person a dreamer. We were counting on the old rules, if they can't pay, the bank would take it back and sell. In high numbers, this would put downward pressure on prices and there would be less qualified buyers to compete with. That was last year. This year, it is a whole new ballgame.

Do you have a link to the source of the information?

"well my point is why should the idiots who can't make the payments stay in their home? Can't the reduced principle be given to a new buyer with better credit instead?"
_______________________________

The philosophy behind keeping people in their homes is driven by the obvious politics involved and also typically makes more financial sense. All things being equal it just makes more sense to keep current occupants in the home, assuming ability to pay based upon the new principal balance.

READ THE FINE PRINT and consider the timing, anything said 5 days before an election cannot be relied upon.

The fine print that I read was principal reductions for a 5 year period using the fdic model. I've looked at that model in depth and it's no bargain for the FB, certainly not something that you should hurry to jump into you if you are safely renting and it will be paid for out of the 700bln that Paulson has access to.

It's nothing more than a cloaked interest only loan, it never builds wealth or equity, the reduction is not free, it is a lien on the house, it must be repaid and in 5 years they will lose their house but it spreads it out. Only fully doc'd will qualify and .38 of their income will be used as the payment, it won't help most Southern Californians. I could bore you with all the details but it is more fun to see everyone go all nutso thinking their diligence will not be rewarded. Just Chill, we will see the proposal in a few days and we can punch holes in it then.

This isn't groundbreaking but since I have a affinity for the women of cnbc here's Diana's take, she's a cutie

http://www.cnbc.com/id/27459607

and here's the actual story that is running the "were working on something" story

http://www.cnbc.com/id/27442009

Correct me if I'm wrong, but ... isn't the gov guaranteeing the new loan, not the old loan?

So, the gov/taxpayers aren't eating the principal reduction, just defaults on the new principal amount.

Election year rhetoric?

I hope so.

Rustico,
Is that you trying to snatch the pebble out of my hand?

sdr

No, this never was rhetoric - it has been in the works for many months. Uncle Sam is going to buy at least $500 billion of securitized loans (I believe they will ultimately buy more) and as the owner they can do whatever they want to the terms. I will give you one guess what that means.

DaC is, sadly, right. (BTW, DaC, you really do know your stuff. What legal line of work do you specialize in that keeps you so well informed?)

Unfortunately, responsible people joining the ranks of irresponsible buyers now is a low-yield proposition. It was a game that paid off hugely when prices were going up. Piggingtons outraged by what is happening should save their powder for maybe 5 years from now, when the market is going back up again from a more attractive low point. Then buy a house every year using none of your own money, and sell the most appreciated house every year, after holding for 1-3 years. That way you have an excellent chance of keeping some good winnings, and risk nothing.

Yep it is pretty much just the beginning of what will be a sensational effort by our government. Frankly it is kind of amazing when you think about it. Sad but amazing.

Guys there are no limits anymore. I know that it really has not sunk in yet, however it doesn't matter right? Automakers, lenders, banks, homeowners, mortgage debt, credit card debt... Most of us here thought that there would be federal assistance to varying degrees. However as much as I harped about my fears of the government coming in to halt things, I am fairly amazed at the measures taken. I am kind of numb to it now... the headlines don't phase me anymore.

I would like to keep thinking all of these measures will not affect the downturn here in San Diego in the neighborhoods I am considering. As we know though all thinks are somewhat interconnected.

Numb is a good word. Anger down there somewhere, although I'm not sure who exactly to blame for this unbelievable mess. It's disgusting. No, it's stronger than disgust. I think it's starting to approach the word 'despise'.

All of this is layered over by a veneer of rationalization. If we don't print our way out, bail out the cheats and criminals, welcome home the prodigal sons, the economy comes apart at the seams. Inaction would be worse.

This is a really unbelievable time we're living through right now.

>I pay hundreds of thousands in taxes each year.
>I have never bought a home, because I didn't
>think I could afford a decent one and, at the
>same time, save enough for my future retirement
>and health expenses.

Sorry, but this is when my "Jackass" alarm went off.

Our entire system depends on debt. Debt makes the banker class wealthy, and the banker class controls the government, so of course they will work to maximize our debts. Those of us who save will be penalized through currency inflation and taxes. Note the tax breaks for home buyers, this gives an incentive to go into debt.

Bottom line is if you are a saver, don't expect the government to do anything to help you. The banker class hates you. The next thing they will do is to "fix" people's loans in some sort of interest-only arrangement so that they can stay in their houses. This will keep people from selling and will help to keep a floor under prices. It's a political win-win! They keep the prices artificially high and keep people off the streets. Of course the "owners" are little more than tenants but they always were. The only losers are us savers that had hoped to one day own our homes free and clear.

I'm starting to think that the smartest people of the last 10 years were the Mexicans who went and got 5 or 10 Matricula Consulars under phony names, bought houses under these false identities, withdrew as much cash as possible from each with MEW and then absconded with the cash down to Jalisco to buy farms. Pure genius! I wish I would have thought of that. And they'll never get caught either.

Although I would like to own a home here, I am fully prepared for the case where that never becomes possible.

this is the BS that has ticked me off -

you are hardworking wage earner. you make good money but are not rich. all the morons who bought with toxic loans ran up prices of homes. your "good income" only allows you to buy an "average" home, while the dumba$$e$ bought mcmansions they never should have, but did b/c they were dumb and took out unsafe loans.

all the homes are now upside down. the idiots who don't make enough to buy that 750k mansion now cry "unfair" and the gov't is going to bail them out. they probably make less than 100k, probably far less - but yet they get a principal reduction, super low interest rates... you name it - let's keep them in their mansion.

you the 100k+ earning hard worker, responsible guy - you try to get some assistance and they will tell you that you MAKE TOO MUCH and you don't qualify.. just wait.

any of this bailout stuff will have strings attached so that most, if not all,of US here at piggington - who make decent money will be told we don't qualify for relief...

so we keep working, keep paying taxes, and they take our tax money and essentially give it to the morons who bought houses they never should have.

this does nothing except piss people off and encourage people to find ways to scam or beat the system and be irresponsible.

what SHOULD happen is there should be NO bailout for anyone. if you crash and burn - good. you will be an example for everyone else to learn from - and people will pay their bills and not extend themselves. they will see that when you are irresponsible with your money - you suffer.

what we are teaching everyone is that you can do whatever you want - spend money you don't have, buy things you can't afford - and when the $hit hits the fan, you will get bailed out.

if you can't beat them join them.

Banks also hate people who pay off their credit cards monthly.