It’s hard to say what she does or doesn’t know. Consider this – how many Americans get all their news off of the combination of the nightly network newscasts and the entertainment gossip shows that come on before the prime-time sitcoms? They know more about Britney and Paris than about when the next general election is.

It’s hard to say what she does or doesn’t know. Consider this – how many Americans get all their news off of the combination of the nightly network newscasts and the entertainment gossip shows that come on before the prime-time sitcoms? They know more about Britney and Paris than about when the next general election is.

I had a similar experience recently. My neighbor who I know only very casually knocks on my door seeking advise on renting out her house. I guess by virtue of being a renter I’m supposed to have some special knowledge to share. Anyway, the conversation turns to the state of the market and I am amazed to find how out of touch she is. Although she did have an awareness that the market had softened and that she couldn’t sell for what she owed (worked for the builder and financed 100% in 2005) her perceived value of her home was at least $100,000 more than what the current market is. When I shared some recent model match comps (REO’s)with her she a) was not aware of these sales and b) believed not that the market had dropped to that level but that the purchasers had instant equity because the price was so low. She went on to tell me that her plan was to rent the house out for a year at which time she fully believed that the market would have recovered to the point she could once again sell the house for a profit.
The whole conversation also left me wondering if there is a lot more distressed inventory than what is being reported. Consider this, three houses in a row on the street I live on none of which is in default. 1) The house I rent- market value $500,000 total loans $625,000 rental income $2500 total of payments $4000. 2) The neighbor I mentioned who is upside down $100,000 and looking to rent and I forgot to mention laid off by her builder employer 3) Laid off escrow worker who is also looking to rent until things get better. I would argue that even though none of these houses is technically in trouble they are all headed to a bad ending. Are others seeing this in their neighborhoods?

I had a similar experience recently. My neighbor who I know only very casually knocks on my door seeking advise on renting out her house. I guess by virtue of being a renter I’m supposed to have some special knowledge to share. Anyway, the conversation turns to the state of the market and I am amazed to find how out of touch she is. Although she did have an awareness that the market had softened and that she couldn’t sell for what she owed (worked for the builder and financed 100% in 2005) her perceived value of her home was at least $100,000 more than what the current market is. When I shared some recent model match comps (REO’s)with her she a) was not aware of these sales and b) believed not that the market had dropped to that level but that the purchasers had instant equity because the price was so low. She went on to tell me that her plan was to rent the house out for a year at which time she fully believed that the market would have recovered to the point she could once again sell the house for a profit.
The whole conversation also left me wondering if there is a lot more distressed inventory than what is being reported. Consider this, three houses in a row on the street I live on none of which is in default. 1) The house I rent- market value $500,000 total loans $625,000 rental income $2500 total of payments $4000. 2) The neighbor I mentioned who is upside down $100,000 and looking to rent and I forgot to mention laid off by her builder employer 3) Laid off escrow worker who is also looking to rent until things get better. I would argue that even though none of these houses is technically in trouble they are all headed to a bad ending. Are others seeing this in their neighborhoods?

I had a similar experience recently. My neighbor who I know only very casually knocks on my door seeking advise on renting out her house. I guess by virtue of being a renter I’m supposed to have some special knowledge to share. Anyway, the conversation turns to the state of the market and I am amazed to find how out of touch she is. Although she did have an awareness that the market had softened and that she couldn’t sell for what she owed (worked for the builder and financed 100% in 2005) her perceived value of her home was at least $100,000 more than what the current market is. When I shared some recent model match comps (REO’s)with her she a) was not aware of these sales and b) believed not that the market had dropped to that level but that the purchasers had instant equity because the price was so low. She went on to tell me that her plan was to rent the house out for a year at which time she fully believed that the market would have recovered to the point she could once again sell the house for a profit.
The whole conversation also left me wondering if there is a lot more distressed inventory than what is being reported. Consider this, three houses in a row on the street I live on none of which is in default. 1) The house I rent- market value $500,000 total loans $625,000 rental income $2500 total of payments $4000. 2) The neighbor I mentioned who is upside down $100,000 and looking to rent and I forgot to mention laid off by her builder employer 3) Laid off escrow worker who is also looking to rent until things get better. I would argue that even though none of these houses is technically in trouble they are all headed to a bad ending. Are others seeing this in their neighborhoods?

Yeah, people just don’t get it. Denial is too strong. This is also exactly why it’s taking so long for prices to come down. Sellers in denial and ignorant buyers still out there. But it kinda looks like there’s fewer buyers out there, so maybe there is some hope.

I’m out in Michigan, chomping at the bit for prices to go down, so I can go back to San Diego. I get the same thing out here. Out here the economy is dismal, and home prices are going down at a snail’s pace for all the same reasons. People just cling to the notion that there home is immune to anything disasterous.

I think foreclosures are going to change this. If banks start dumping their luggage at a quicker rate, comps will reflect. At least that’s what I’m hoping.

Last time around, I bought a house in Murrietta from the bank and a 20 acre avocado grove in De Luz. I gave an offer in De Luz for a 20 acre horse property that was first listed at $950 just one year earlier. My offer was $250. I didn’t get it because a previous offer of $220 was already accepted. I tell these stories to people out here and they say, “Well, that’s California.” Like somehow Michigan is better?

My brother tells me that my expectations for other people are too high.He says just lower your expectations and maybe you’ll be pleasantly surprised every now and then. He just might be right.

Well, it’s the first real snow of the season. Kids are pulling at me ….

Yeah, people just don’t get it. Denial is too strong. This is also exactly why it’s taking so long for prices to come down. Sellers in denial and ignorant buyers still out there. But it kinda looks like there’s fewer buyers out there, so maybe there is some hope.

I’m out in Michigan, chomping at the bit for prices to go down, so I can go back to San Diego. I get the same thing out here. Out here the economy is dismal, and home prices are going down at a snail’s pace for all the same reasons. People just cling to the notion that there home is immune to anything disasterous.

I think foreclosures are going to change this. If banks start dumping their luggage at a quicker rate, comps will reflect. At least that’s what I’m hoping.

Last time around, I bought a house in Murrietta from the bank and a 20 acre avocado grove in De Luz. I gave an offer in De Luz for a 20 acre horse property that was first listed at $950 just one year earlier. My offer was $250. I didn’t get it because a previous offer of $220 was already accepted. I tell these stories to people out here and they say, “Well, that’s California.” Like somehow Michigan is better?

My brother tells me that my expectations for other people are too high.He says just lower your expectations and maybe you’ll be pleasantly surprised every now and then. He just might be right.

Well, it’s the first real snow of the season. Kids are pulling at me ….