Housing bubble bloodbath

[DaCounselor]

“I don’t think as many of these people will spent a lifetime paying of their bad investment, instead, I believe most in that position will just eventually walk away from their homes.”
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The only people who will be able to walk away relatively unscathed (if you call a 7 yr credit ding – uh, I mean credit crater – unscathed) are those who have not succumbed to the refi and/or HELOC market.

If a property owner finds themself in a situation where they cannot afford the mortgage payments and cannot refinance into an affordable payment, they will simply sell their property and take whatever profit the market allows. The idea of walking away from the property inherently assumes that the owner is upside down or will be upside down after transaction costs. In this situation, the owner can choose between selling the property and covering any shortage with an out-of-pocket contribution, or just walk away.

Unfortunately, walking away from a refi, HELOC and/or 2nd mtg. exposes the owner to a deficiency judgment for the loss suffered by the lienholder(s), including their costs. It also exposes the owner to being taxed for the difference in foreclosure sales price and the amount owed on the property – it’s viewed as income by the IRS. Walking away may have more devastating financial consequences than holding on and some way, some how making the mortgage payments. In fact, I think it’s generally found that most folks will forego just about all other expenses just to scrape together their mortgage payment.

[ibjames]

which is why the downturn will take.. a… while….

[PerryChase]

In fact, I think it’s generally found that most folks will forego just about all other expenses just to scrape together their mortgage payment.

We’ll have to see about that one. I’ve watched enough _People’s Court_ to know that most consumers are unable to stop consuming regardless of the circumstances. Perhaps you’re right and keeping a house will change consumer behavior.

Time will tell what “owners” will do when the emotions are out of the house, or it’s too emotionally painful to be in the house.

[no_such_reality]

SDR, no I’m not.

It’s cost of living. In each of the areas I listed, you’d have the same comparable total expenses and San Diego. Not more.

If you live on $50,000 in San Diego, you can get by with $49,000 in queens. $44,000 in NJ.

If you live on $100,000 in San Diego, you can get by with $98,000 in Queens.

I have family in the White Plains (NYC suburb) area, it is not more expensive than suburban SD.

[sdrealtor]

NSR,
I think we are arguing two different points. I wasnt commenting on the cost of living, I was commenting on incomes being higher in those areas (and they are way underreported there also), that the higher incomes could better support the home prices there and that there is far less of a bubble in those areas. There is also alot more unreported income on the east coast as there are a lot more family owned businesses vs.nearly everything is a national chain out here. Walk into a family owned business on the east coast and offer to pay cash and you will reap a nice discount in many cases. Its an accepted thing back there.

BTW, I have family in the White Plains area (Somers and Briarcliff Manor).

[The-Shoveler]

Nor_LA-Temcu-SD-Guy

Fannie Mae furloughed all non-essential contract employees for about three weeks over the holidays and new year and just announced a hiring freeze with no end date set.

[no_such_reality]

Then we’re saying much the same thing.

Not only is income higher there, cost of living is lower there.

Now, can we just do something about the weather.

[The-Shoveler]

Nor_LA-Temcu-SD-Guy

The weather was good (warm) on the east coast (50’s and 60’s) until the last week or so.

[smfj]

This is an interesting report on salaries for comparable positions in various metros: http://charlotte.bizjournals.com/edit_special/47.html

Not surprisingly, SD beats out NY only for engineers, pharmacists, and secondary school administrators (worth noting though that posh school districts outside the city, such as Bronxville, pay much, much more than in the city).

When I moved here three years ago from Westchester County, NY, I expected it would be cheaper to live here, but quickly found that was not the case. Assuming one works in the city, lives in a suburb, and commutes by train, you’re typically looking at a pretty drastic pay cut, similar housing costs, and increased commuting costs (even my car insurance premium increased) to move here. Income taxes are higher (assuming you weren’t paying city income tax), food is more expensive, sales tax is higher in some cases…

[smfj]

oh, but I do enjoy the fact that I have only once turned on a heater since I’ve been here (this weekend) and I’ve never had to dig my car out of the snow

[SHILOH]

Commenting about the cost of living in Boston…vs San Diego.

The state sales tax is 5.5% compared to 7.75%…and in MA there is no clothing sales tax at all. Probably because you need so many more clothes here.

In New Hampshire there is no sales tax, period. So a lot of people commute to Boston from NH….although the NH property tax is reportedly higher.

I would say that when I compare Boston to SD, condos and detached homes are more expensive in SD. The Boston real estate market is also declining and is still overpriced –but SD is completely unrealistic. The market in Boston is a lot of renovated old buildings/homes and SD is mostly new….but still, SD prices are unrealistic especially considering the median income.

In Boston, it was reported that the med/pharm/bioresearch sector was losing out on the “best” qualified professionals since the cost of living…housing…was too high. The quality of life is not outstanding here, other than it being a mecca of higher education. That equals a lot of desperate students everywhere…and even resident docs and fellows don’t make that much $.

The BIG DIG: BIG DIG has been a money drain…From what I have seen on both coasts…Caltrans does a superb job compared to the engineers who planned the Boston roads. Maybe some of the CA engineers should be recruited to come to MA. By now, most people would have heard about the woman who was killed when her car was smashed while driving thru the brand new tunnel ….hit by a falling concrete panel. That and the subsequent repair costs–all caused by glaring engineering flaws –bolts that were too weak to hold the concrete up.
Add to that $$$$$$$$$$$$$$ there are tolls to pay for the roads and bridges coming in and out of Boston…and on the MASSPIKE which is like being charged to use I-5 or I-8.

Housing & Income: I make more $ in New England….rent is slightly cheaper, but heating an average winter is $200 a month for forced air…about 5-6 months for a small 500 sq. ft apt.
Commuting: I could find something in the Greater Boston area on public transportation (ie subway or rail) that I could afford, which is a plus. For example, I live about 25 miles outside of Boston and my rail commute is 30 minutes on the train..I drive to the train 10 minutes…
That commute in the morning by car would be minimum 45 minutes and parking would cost at least $100. 8 Months out of the year you can expect bad weather -add to that old conjested freeways… Public transportation with subways and rails is excellent for commuting. and even though we have a subway and commuter rail (which cost anywhere from $65 -$150 per month)

[PerryChase]

Some city leaders in San Diego want a “big cover up.” They want to cover the 5 freeway downtown and build a park on top (similar to the big dig) then connect it to Balboa park to create a park-to-bay area. Sounds grand but who’s gonna pay?

[sdnativeson]

PC, seriously?

[PerryChase]

Very seriously. Planners have been talking about it for a while now. Some condo developments use this Bay-To-Park dream as a selling point!

Not only that, the City will be diverting $1 out of $7 of the upcoming water/sewer increase to pay for the pension deficit. And here we thought that all that money was needed for pipe repairs.

The city of SD is broke but we have grand dreams.

[SHILOH]

No one I know in SD has ever told me about a project for park to bay area. I’ll have to find out more.

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