San Diego Housing Market News and Analysis

Good info, lostcat. I'll be watching the financial pages next week.

Buy gold, silver and some foreign currencies since the US dollar is going in the toilet.

Notice that interest rates are lower in Europe, with the Euro than here, and the Euro is gaining on the dollar? Europeans may suck at running an economy, but they do understand the meaning of hard currency and aren't afraid of a little unemployment.

We need a depression right ahead of the election in 2008!

I'm sure the economy looked real rosy in 1929 as well!

This time around, people are buying over-priced real estate on margin instead of stocks. You can buy a house with 0% margin!

What's the symbol for WMC?

LostCat, since you sat in the Caltran meeting and mentioned freeway expansion, can you give us more details? Since alot more houses are being build between the 56 & 78 and 5 & 15, is there any plan for a freeway in the middle?

A Sinking Sensation for Subprime Loans
The default rate for borrowers in the sector has jumped faster than anyone was expecting, raising risks for housing and the overall economy

by Joe Niedzielski From Standard & Poor's Equity Research
Business Week
http://www.businessweek.com/investor/con...

The gathering storm clouds over the nation's housing and lending markets grow darker each day. Fueling the latest concerns is further fallout in the subprime mortgage loan market, where lenders offer financing to less-creditworthy buyers.

The 15 is already being built and will include a BRT (Bus Rapid Transit) line that will take people into downtown SD. So if that's your commute, you're in luck. Unfortunately SANDAG planned it wrong so it will still take you longer to commute by bus than car.

They are planning a 20 lane freeway along the 5 between 76 and 56, but it's heading toward litigation. Too many homes will get whipped out. I just don;t understand when people are going to wise up about traffic. YOu can't build your way out of it and no matter how many lanes you build, it just forces people further away from their jobs and then ends up getting glogged up again.

But anyway, nothing is going to get build because transnet is under funded, per SANDAG's up coming RTP.

The 15 is already being built and will include a BRT (Bus Rapid Transit) line that will take people into downtown SD. So if that's your commute, you're in luck. Unfortunately SANDAG planned it wrong so it will still take you longer to commute by bus than car.

They are planning a 20 lane freeway along the 5 between 76 and 56, but it's heading toward litigation. Too many homes will get whipped out. I just don;t understand when people are going to wise up about traffic. YOu can't build your way out of it and no matter how many lanes you build, it just forces people further away from their jobs and then ends up getting glogged up again.

But anyway, nothing is going to get build because transnet is under funded, per SANDAG's up coming RTP.

AN
Funny question. I believe there was a central freeway proposed so time ago and an influential lobby (RSF) defeated it and got it buried.
SDR

It seems that the old central-city model of urban planning works a LOT better than anything that's come along since the invention of the automobile.

I agree that metro areas like San Diego will NEVER be able to add enough lanes to make traffic flow smoothly.

I've actually thought about moving back to San Francisco due to being able to get around on foot and public transportation vs driving - I find it a lot more enjoyable and less stressful. Now if they could do something about the homeless people asking you for money every 2 seconds, it would be ideal. The new mayor up there has initiated some changes in this regard but I'm not sure how much of a difference they will make.

Retiring is the urban core of a city such as San Francisco is ideal, IMHO. You can get rid of the car and the insurance that you seldom use. That leaves more money for personal spending.

Wow,

It's actually refreshing to hear people get it. Not to many people understand the terms urban core. And not to many people understand that you have to move to where transit works not expect it to reach out to the burbs and think it will for everyone.

PerryChase, you honestly have put my mind at peace now knowing that there are actually others out there that understand the benefit of a good mass-transit system and the importance of living in an area that is accessible to it.

This country has a long way to go before people understand that it is the landuse plans that make mass transit ineffective here in SD, not transit. Although, some past planners that worked at MTDB and SANDAG are clueless when it comes planning transit that works. You'll see how badly they messed up with the I-15 project. Also the greenline trolley project that takes you from SDSU to Old Town and forces a transfer to get to downtown SD. The trip from Mission Valley to Downtown only takes an hour. What a great option... lol... Sometimes you just have the spend the money that it takes to build things right instead of trying to cut corners.. Thanks SANDAG.. idiots...

Maybe I have the wrong friends in San Francisco, but I didn't see how we were supposed to get by without a car. I'll admit there are a ton more cool urban neighborhoods there and we could walk for coffee (something I'm amazingly able to do here), but for them to get to jobs and school, they still had to get in cars or hop on motorcycles or whatever.

I'll agree that mass transit seems much more effective there than in San Diego, but I'm still not sure it's everything it's cracked up to me. I haven't exactly heard SF'ans sing the praises of their busses either.

I don't ride the coaster because of expense and inconvenience.

Backtrack to the Encinitas Station, pay $4.50 each way, and then on the way home you'd better hit the shuttle down to Sorrento Valley in time, and of course you wait another 30 minutes or so. I don't think my Chevy Impala with gas oil and brakes wear and tear are that much.

I think there can be a middle ground.

I live in Hillcrest, take a free shuttle to UCSD (for work) and walk most places. I still have a car for errands and road trips. A tank of gas lasts me about six to eight weeks.

Looking towards the future I think I could manage a long commute with one of these babies...

http://www.flytheroad.com/

When I lived in San Francisco, I *did* have a car but I only used it occasionally - I didn't need it to get to work or to do anything that was part of my daily routine. That's the kind of living I think the US needs to move towards.

If the Peak Oil theory is correct (which I believe it is), oil prices are on a long-term upward trend (exceeding the rate of inflation) as supply will not be able to keep up with worldwide demand. What happens to So Cal home prices when gas is $6 per gallon?

Assuming you are correct, I would think the 'urban core' areas would increase in value (fundamental, not bubble) and the outlying areas would decrease.

However, that is assuming everything else remains the same. It's just as likely new modes of transportation or working will become available that lower the costs associated with commuting.

At first they wanted to lay off as many people as they could in a way that would eliminate their ability to collect un employment or require severance pay. They would basically put everyone on a performance review period and force them to meet a specific target, something around 20-million in sells. Since not a single person in the company is meeting these targets, they couldn’t do it this way.

-------

wow

this is so totally "Second prize is a set of steak knives"

....and coffee is for closers...

Everyone blames Bush for everything that goes wrong. Bush didn't put a gun to anyone's head and MAKE THEM take out loans, buy big expensive houses, buy Hummers, buy BMWs, get pedicures, yada, yada. GREED. All of these people that have been kidding themsleves that they could afford the big house, buy the investment property or buy all the other CRAP that they think will make them happy and look like they are somebody, and really couldn't afford it, AND didn't have an exit strategy, are now going to suffer (How's that for a run on sentence?). They will get a reality check. Actaully, I HOPE they get a reality check. When things go wrong, most people now days want to blame somebody else for their stupidity. Sub prime lenders are BAD, everyone knows that. But they don't force people to take out loans. The people made their own choice. I don't feel sorry for them one little bit. Same for people with large credit card debt. Those people decided all on their own that they would give themselves a loan (using credit cards) to buy crap. Now they have large amounts owed on cards and I bet they can't even figure out where the money went. Probably going out to dinner. LostCat, of course a business is going to look out for itself. The days are gone where someone could retire from a place. You are just a number in most companies and they could give a hoot about you. They want production, period. I don't know where it is all headed really. Production.....we should all slow down and enjoy life a little more.

nobody made these people sign up for these loans

but there was a failure of regulation.

Why did the Treasury issue regs increasing underwriting standards last year
when they should have done that 5 years ago.

why were unlicensed brokers allowed to handle mortgage products?
the fed could have cracked down insisting that brokers be licensed
the same way as stock brokers are and we'd have seen far fewer
liar loans

consumers are stupid, but the money tribe has been total evil.

Habitat ofr humanity sells you a home with 0% interest mortgage,
and the weevils show up with acash back re-fi that
sets them up for a rate they can't handle.

WMC is owned by GE. I'll keep you posted this coming week. I'll find out if AKA Chris has heard anything new.

The Blame game. The majority of Americans appear to immediately blame someone else for their own mistakes. I find it very disgusting. People think the Government should be doing everything for them. Our Government is a screwed up mess. YOU NEED TO TAKE CARE OF YOURSELF. I also suggest people read John G. Miller's book 'QBQ'.

personal accountability does not excuse fraud.

when you sell a mortgage product waving around the
teaser rate and bury the hidden fees, the escalation clauses and
the penalty issues inside the fine print, it does verge on fraud.

when you sell a mortgage the end user can't afford, by all
measures of financial reasonability, and you do it solely to generate
a fee for the bank and broker, it is a fraud.

110% LTV? 62% NI? Those are frauds by everyone against everyone.

A Rich Dad Quote,

This quote was from Robert Kiyosaki (Rich Dad) from an artical on Yahoo Finance.

Where Deflation Does Its Damage

In a deflationary market, the value of your home can drop. If the value drops, the bank may call in your loan. Even if you've never missed a payment, and even if you're ahead on the payment schedule, the bank can call in your loan if they feel the value of the property is lower than the loan amount.

For example, say you buy a house for $100,000 and put 20 percent down and borrow $80,000. If the market deflates and the value of your home drops to $70,000 (because everyone else is selling their homes to get out of debt), the lender may ask you to pay the $80,000 you owe immediately.

If such deflation happens, cash will become king. There will be half-price sales on BMWs, expensive restaurants will close, and people will be out of work. And anybody who caters to people with dumb money will be in trouble. As I said before, deflation is much worse than inflation.

Great site, found it on Google after searching for "WMC subprime".

In the debate on who is to blame, the lender or the consumer, the answer is both.

I worked for a subprime lender and then my conscious got the best of me. I quit after a broker asked me what fees he legally could make-up to charge his borrower.

It is true that these subprime lenders offer loans with horrible terms that will most likely put the borrower in default. But I have never seen so many stupid consumers who are more than happy to be suckered in.

Look, I got great credit and I know I can go out there and some dealer will let me lease a Lexus LS. The thing is I know I leasing an LS is not in my best interest so I don't do it. I know that the payments will overstretch me.

A lot of these borrowers are in on the scam. They set up fake employments (using a family member) to help them get a loan. They knowingly overstate their income. And why? Because they saw there house was worth more, so they want to take money out so they can buy a BMW 7 series or an Escalade. They continue refinancing and refinancing every time they get equity. I do not feel one bit of sympathy for these people. They get what they deserve.

The real problem in the mortgage industry is not lenders, it's the brokers. Mortgage brokers are the shadiest most greediest people ever. Since my time dealing with mortgage brokers, I have come to look at attorneys as saints.

The government needs to regulate mortgage brokers with the same zeal they regulate securities brokers. To sell stock one must be licensed and then have the SEC watch over you . What do you need to do to be a mortgage broker? Work under someone who took some classes at community college. That's it. During the boom, all these morons, criminals, con-men, high school dropouts all became mortgage brokers. They couldn't care about compliance or the regulations and why should they. There is no institution like the SEC to watch over them. And what happens if a shady mortgage broker gets caught? They just reopen under their wife's name after sending her to community college.

i agree a lot of the people getting foreclosed are
childish, stupid, immature, greedy, stupid, did i say STUPID,
but, the brokers didn't care, it wasn't their money.

HSBC, etc didn't care either, they were selling the paper to
merrill who sold it to pension funds etc.

had the MBS market been tightly regulated, you would see
the hazard held to the issuers.

As of 2 weeks ago, the day New Century's stock plunged over 35% of its market value, Wall Street is no longer buying loan pools, or forward commitments for that matter. GE Money (dba WMC) is prepared to carry the next 6 months on its books (or however long it may take till the market opens again which it will) and is absolutely committed to riding this out. If we take another look at the top 25 lenders in the space in 90 days, we will see another 17 of them missing, likely selling at fire sales for pennies on the dollar. Without a market going forward to sell loans, very few companies can survive

As for the poorly spelled and worded rumor posted above, I cannot verify it. Considering the current environment, shutting down must be considered as an option. But I would suggest that it is in the interest of competitors to have others take their eye off the ball. Who do you believe?

Don't Panic!

WMC is not going to shut the doors! Not sure who this "Chris" is, but clearly not a person who is in the know! His or her comments are clearly ridiculous and irrational at best.

WMC must right size, as does every other player that will survive this market. Don't be surprised if GE finds the opportunity here and emerges as the market leader in Q3.

I promise you, that whoever "Chris" is, they have no idea what they are talking about!

Trust me! Lostcat does NOT have good info. Not one thing in his commentary, other than the spelling of WMC, is correct. Everything that "Chris" is telling him is absolute garbage! Of all the rumors I've heard so far, this one is the most ridiculous!

Trust has nothing to do with any of this, especially with anymous people on the internet -- Heck, you could be Richard Nixon incarnate. The best part is the market has it's own momentum and we all will get to see who is right/wrong . . . or a combination of the two.