San Diego Housing Bubble News and Analysis

I am squarely in that category - I bought my house years ago - it's worth about 1/2 of what I paid.

I consider myself a victim of the fraud that went on both in the RE/Mortgage industry and Wall Street.

Why should I have to pay the rest of my life due to the massive fraud committed by others?

Can I borrow $1,000 from you? I promise to pay you back $1,200 if I make more than $1,200 with the money. If I don't, then you'll get back whatever I have left of the $1,000. I want a shot at making a lot of money, but I don't want to lose much of my own money. Do we have a deal?

PR: Not a valid comparison, at all.

Spend some time thinking about your irrelevant analogy.

If you go to Las Vegas, walk up to a table and place a bet - don't you assume that the other players/and or dealer are playing by the same rules you are?

Maybe you will make money, maybe you won't - but you assume it's at least a level playing field going in, right?

If you loose money, then 5 minutes later you learn the game was rigged and fraudulent, would you want your money back? I suspect so...

There's really no difference when it comes to Real Estate IMO. Many laws were broken by many scum bags. I assumed laws were being enforced for example: lying on a mortgage application is fraud, appraisers committed fraud along with their accomplice dirtball realtors. Mortgage brokers committed fraud on a wide scale basis. Wall Street brokers committed fraud as did the rating agencies.

The list goes on and on - I probably don't know the half of what lies were told.

Now I'm supposed to pay the price for THEIR lies?

Well paramount lets see... I have been renting since 2004... My wife wanted to buy a home but everything we saw was in my opinion overpriced. Many of my friends wanted homes and they did not buy either.

So let me ask you this, did someone force you to sign the loan docs?

Also do you pay federal income tax? Do you pay social security? If the answer is yes than you are already paying for the lies.

I am not advocating you walk or don't walk. I am advocating that you should not blame others for your decision. However slimy your realtor was, your mortgage broker was, they did not hold a gun to your head. However slimy all the bond rating agencies were to give AAA ratings to the securities that were created out of these mortgages, that to had nothing to do with you signing those loan docs.

To go back to your analogy. Many of us did not choose to go gamble at the table you gambled at. The best way not go get ripped off by card sharks is to not play the game. You played and I am sorry about that.

You said you purchased your home a year ago? So 1 year ago you had no idea about the market decline? You had no inkling that we could be in serious trouble? Again I am sorry to hear about that. Yes there is plenty to blame but the fact is that you purchased your home when we were well into the depreciation phase. True that there are unsavory characters everywhere in this profession and you can choose to blame them but the bottom line is that you signed the papers.

lol@ this thread haha.

Reminds me of this guy:

DONT TAZE ME BRO!
http://www.youtube.com/watch?v=8XWijwmvGU4

I said YEARS ago - specifically 6+ years ago.

If the gov't had been doing their job, it's likely I for one would not be in this situation. They weren't.

lol hahah - what in the hell are you talking about?

BTW, a card shark is one thing, I can spot one a mile away b/c I assume just about everybody has basically only one motivation (particularly in California) - what's in it for me.

On the other hand, you may be playing with a card shark, but that doesn't mean fraud is being committed.

In the case of this bubble and subsequent depression (or whatever it is...), MASSIVE FRAUD WAS BEING COMMITTED - especially in this hell hole known as Temecula.

Forgive my intrusion, however I want to ensure I understand what you are saying correctly.

You're saying your house that you bought over 6 years ago is worth half of what you paid for it in 2003?

I have seen houses in Temecula sell for half of "peak", but not half of 2003.

PR: I'm still trying to figure out your logic - maybe you should work on Wall Street.

If I give you a $1000, and then you give me $1200, And I pay you back $1000 and then I stand on my head bla bla bla....

Your hurting my head!

I said about 1/2 - and I am considering selling costs in that estimate.

I bought for 270k.

At best I could sell now for about 170k, then subtract selling costs/commission etc..that puts it at about 155k.

So roughly 43% loss.

Before it's all over, I believe my house will drop to about 120k.

Right now your home is likely oversold at those prices. If you never put your atm card into your garage door, you likely have a pretty modest payment. I'm with SD R on this one. Quit whining, accept responsibility for your life and get on with the business of living it.

I'll be glad to stop whining and accept responsibility when others do the same - particularly those who lied and broke the law.

Oh no that's right - I forgot - those people are the one's getting a bailout.

wow paramount - your life must suck - being a victim is such a powerless place to come from

interesting that others were able to see the developing bubble in 2003 when you purchased - I started selling my properties in 2002 because I could see the bubble developing and expected it to pop at any moment

how about this for an analogy to your situation:

I detected and reacted to the bubble TOO EARLY and therefore I deserve a bailout - I should be given the money that I left on the table by selling before the peak occurred in 2005/6/7 - by my calculations my bailout should be about $500K

I underestimated the size of the ultimate bubble because of all the fraud going on - since it is someone else's fault that I made a less than optimal decision I should be bailed out to the tune of $500K

Back to the thoughts posed in the OP...

I personally am not a big fan of government intervention in preventing foreclosures. The market will eventually return to a sustainable, non-inflated level. All of the government intervention I've seen seems to be targeted at either reinflating, or postponing that eventual outcome. I'm in the "rip the bandaid off fast" camp... It's painful - but better if it's over quickly.

Personally... I bought my house in early 2003. According to Zillow it's worth 70k less than I paid for it. But my mortgage is a LOT less than what Zillow says it's worth, because we put a lot down. I'm comfortable paying my mortgage because:
a) I bought something we could afford.
b) the house works for us.
c) we spent (non-financed) money building a handicap accessible companion unit for the in-laws to live in... and there is NOTHING out there for rent or sale that would fit our family needs like this.

Paramount I am sorry I misread the post. It was late when I posted last night and I obviously didn't read correctly. However that changes nothing.

Guess what... I have a home I bought in 2003 as well and it has lost tremendous value.

Guess what? It is my fault for buying it isn't it? The person I bought it from did not hold a gun to my head. The appraiser who appraised it did not, and neither did the mortgage broker I used.

The way I see it, there is a vast misunderstanding that many people have/had which is when they signed the loan docs, the responsibility they are incurring is

************DETACHED**********INDEPENDENT************ORTHOGONAL**********

to market conditions. Furthermore you may indeed have been mislead just like many others. Still the case in point is that not EVERYBODY was. Some people said, no... no I will not do this because it does not feel right for me.

Yet those who held back are still being punished for the same wrongs that were committed against you.

Here is the point, you can kick and scream and play the victim but we all are paying the penalty here.

Aside from that, the analogy still holds about the card game, don't play because even if the game is not stacked against you, you can still lose.

Paramount, why not be glad you are not in worse shape? Certainly with the numbers you are talking about you avoided some of the temptation to prematurely go for the brass ring that some did not? If you can afford your house you are in relatively good shape?

paramount, lets turn this around. If the bank or agent refused to sell you the house you probably would have sued them. Again, the victim because they were selling other people houses. Suck it up and remember it was *your* decision to buy.

I watched house of cards few nights ago. And I agreed to paramount about those criminals from a loan officer to a guy in wall street. A guy like a head of quick loan should be punished severely at the maximum level under the law allows. if the current law does not, something is wrong in the system so fix it now and then punish them asap.

They all have to be ejected from our financial systems.

For the record, I am old school and bought well within my means, made a sizable down payment (~10%) and have a fixed 30 year loan.

Why did the bubble expand so much? Mainly due to lies.

Just like death is the ultimate cure for all diseases, foreclosure is the cure to this financial disease. Walk away.

paramount, unless you sell, you didn't lose anything. From my memory of other posts, your payment is $1500, it is a fixed rate and you can afford it and you put 10% down. That is about what rent would be for your place. Right now your sales price would be based on a market almost entirely made up of shorts and repos. Why sell now? What does it matter how much equity you have, when your place was worth 400k it wasn't in your savings account it was just an appraised value, the payment was the same. It is just a matter of how that makes you feel, you didn't have that money and you haven't lost the money based on today's numbers either. 2003 numbers will return, probably sooner than you think, the people who really need to evaluate their situation are the 05/06 buyers which most of them have toxic loans that were designed to be refinanced within 5 years and now they are stuck with them.

If my assumptions were incorrect and your loan is not as low as I stated or if it is not a fixed rate, wait a few weeks. The government plans that should be released soon are all about bailout of people in your scenario. All the interviews and articles I read this week are about bailing out those in the margins and not the extremes, saving those who didn't lie about their income and have been making thier payments for at least two years but are a little underwater and feeling just a little financial stress. The bailout would be in the form of being able to refi an underwater loan to a 4 or 4.5 fixed with low refi costs and a little principal held back that you would only pay back when you sell or when it returns to it's value.

Scenario: your 240k debt has 70k held back to make it the current value of 170k, you make a fixed payment on the 170k at 4% which is $811/mo P&I, when the market returns to 2003 levels or when you sell, they get that 70k back. They only want to do this for those who can afford to pay, have a history of paying and more than likely will continue to pay. The only loss for them is a few years interest on 70k ($150/mo for three years is a little over 5k). For 5k, they avoid foreclosure, you stay put and keep paying and one less foreclosure hits the market.

This cheaper bailout plan will be seperate from the stimulus and I like it because it doesn't cost taxpayers or banks much. They will have some form of qualification and solid payment history/verifiable income is the cornerstone so it rewards those who are paying. They learned that the fb's still don't pay even when they get a loan mod so they will have to be sacrificed but the masses in the margin do pay and will pay, they just need a little boost to get them through this rough patch. Making it quick and readily available will put a floor on things.

As usual, Temeculaguy cuts through the fog and explains the situation better than anyone.
He should be a journalist, except he is too smart.

I second that sentiment; I have to say (for what it's worth), I felt a lot more optimistic after reading TG's awesome post. I yield to the master.

Where's my $1,000, paramount?

it sounds rational but it still feels bad. I moved to temecula in fall 02 and I remember houses on my cu de sac where we were renting and contemplating buying were 290k. I was afraid of being stuck there, and of course was fairly incredulous when they hovered in the 400's. I felt kinda dumb for not buying one, and took crap from family, but that money i couldve made if id bougth and sold quickly isn't mine anymore than the money paramount saw come and go was his. they are all theoretical. I think the whole issue now is just are you ok with being stuck somewhere. i guess that's a negative way of saying are you ok with holding on to the house for 7-10 years. That sounds too positive for me. I think it's better put, would you be bummed to be stuck there for another decade. if the answer is no, of course not, it'll be fine to stay there, then, the flows of moneya re all theoretical. If your answer instead is, no, I want to be able to get out of that dump any time I want, then, it's a bummer to be way underwater. i gotta say, though, having made the reasonable decision not to buy one of thos ehouses for 290k, it seems like a ripoff to make me pay for other people who were dumb. The least everyone can do is up the measly 7500 tax credit to 30-50k to balance it all out, since I should be bailed out for the profits i lost not buying in 03 and selling in 05

I never expected to make money on my house - I might have expected that the value might go up 1,2 maybe 3% a year at the most.

What I didn't expect is that I would loose 50% of the value (approx).

I expected to work hard to pay off my house in hopes of one day actually owning our house.

I think my expectations were and remain very modest.

California may be the only state (except Florida) where these boom/bust cycles are so extreme.

If your goal is to one day own the hous then nothing has changed.

What made you think that 2003 was not already in a bubble?

What makes you feel entitled to be "protected"?