LA Times article today on surging rents

[EconProf]

Good point HLS: The big banks that made the foolish loans off-loaded the pain onto the taxpayers with the help of policies such as bailouts. That’s why moral hazard seldom exists when both parties are private sector actors. Each has an incentive to discover trickery or sleazy behavior of the other party. It is when governments, reacting to populist and emotional appeals, get involved to “help the little guy” that we all get to pay for the moral hazard. Often the pain is spread in hidden ways and spread over so many that we aren’t aware of it.

[fat_lazy_union]

No, actually I don’t feel sorry for them at all. As a current landlord and potentially even more so in the coming years, I do hope rent keeps going up… In fact I hope it skyrockets….

Personally, my living costs are going down with the ever decreasing mortgage rates and generally paying down the loan debt…Meanwhile, my income definitely is staying steadily if not gone up a bit during this time, as I have tacked on more passive income… (I was able to gain 1 rental property from this meltdown…And possible more in the future)…

And relatively speaking, stupid people that did stupid things for the matter have to deal with their consequences these days. They’re starting to finally get foreclosed on… They get to pay for higher rent now…to people like me…And a lot of them, the credit spigot is now off. They’re gonna miss out on the these killer cheap credit that will enable responsible people like us to grow our net worth…..

For the first time, I actually think people that have been financially responsible are starting to get the upper hand…,

Cheer up folks…It’s not all that bad for people that’s been responsible.

[bearishgurl]

[quote=jstoesz]BG, you said the word Utils! My affection for your long winded posts has grown exponentially. My sailboat in SD is titled Utils. It’s a great word that deserves it place in common vernacular.[/quote]

jstoesz, the asking prices for Pt Loma (SD) houses are a good bit lower now than when you were living on your boat there. And I think you once posted that you’re pretty handy and could take on a “fixer.” Why don’t you take a look?

http://www.sdlookup.com/Real_Estate-Point_Loma-Houses_For_Sale-92106

Is there any possibility that you could get your old jobs back (or new ones) in SD? We all just have ONE life to live!

[bearishgurl]

[quote=HLS]We are witnessing the slow painful breakdown of the largest Ponzi scheme in the history of the world.

So many people still don’t get that BANKS do not own most of these loans, they are SERVICERS.
They make more money by dragging out foreclosure due to contractual agreements.

I completely agree with the outrage but what nobody seems to understand is that if foreclosures were all completed ASAP and homes were put on the market and listed at current market prices, it would push prices down further leading to even more underwater borrowers which would lead to more people walking away leading to even more distress sales.

There are not enough QUALIFIED buyers to buy these homes at current levels. At lower prices houses will get sold.

It’s a vicious cycle that if allowed to happen would cause the economy to collapse.

It’s a Catch-22 for the govt. They are counting on more people to be stupid & worried about their credit scores and having an emotional attachment to a house rather than being financially intelligent.

There are govt idiots making decisions but even they are aware of what the consequences are.

The money simply does not exist to buy all these homes. The derivitives market has been built on a shaky house of cards, based on risky loans.[/quote]

HLS, I DO understand that it is gubment manipulations that have made the housing market what it is today. People started defaulting in SD County en masse in early 2007 which was more than five years ago.

I believe if lenders had foreclosed promptly on the defaulters beginning in 2007, and continued to do so thereafter, we would already have worked our way thru the bulk of distressed inventory by now and the sold comps would have been now stabilized or well on their way to doing so. This in itself would have lessened the incentive to strategically default. When underwater homeowners in CA see their friends, relatives, coworkers and neighbors default and then get promptly foreclosed on, they will either continue to pay their mtg, give keys for cash and walk, or “squat” up to 141 days (3.5 months, not 3.5 years) until they have to leave.

This BS about “playing the game” to obtain a mod is just a tactic used by defaulting trustors to buy more time to live free. It’s only a game that’s being “cooperated with” because they don’t have to make mtg payments for many months while they’re in the throes of “applying” and “reapplying.” During all this, they were hoping (and rightly so) that there would be another bailout waiting for them if they could just pretend to be interested in a loan mod that they didn’t qualify for. Meanwhile, some successfully sold short and the balance of their debt owed was “forgiven.” The vast bulk of these short sales generated even lower sold comps than REOs did. Short sales are a scam on the defaulted-upon lender as well as all property owners in their surrounding area, IMO. If potential strategic defaulters saw that they wouldn’t be able to sell short and they would lose their properties to foreclosure in 111-141 days, they would have done the “cash for keys” thing (if offered to them) or let their lenders take their property in foreclosure. Yes, the sold comps in 2007 thru as late as mid-2009 would have fallen to sh!t but we would been able have seen the light at the end of that tunnel by now.! As it stands, we are five-years-plus into these never-ending gubment manipulations and all they have done is string out the inevitable and unjustly enrich many, many undeserving scumbags. The many homeowners who purchased pre-bubble and never cashed out are now left holding the bag on this debacle with significantly artificially-lowered home values as a byproduct of this “social experiment,” which caused the market in late 2011 to crater to ’99 – ’02 values in many areas. These years were long before “loose lending” became the norm.

I’ve posted here a few times that I don’t believe in “short sales,” except for those who purchased at the height of the boom and never extracted any cash from their property. In general, underwater “owners” have “too many options” in my book, NONE of which were listed on the trust deed(s) and note(s) that they signed. The only ones benefiting from short sales are RE brokers, agents (and their buyer-friends and relatives), mtg loan brokers and RE ancillary services. The scumbag debtor comes out of a SS with a slightly higher credit score than if he/she had been foreclosed upon plus the cash (or what they bought with the cash) they extracted from their property.

I think there WAS in 2007 and IS NOW enough private money available to buy REOs in bulk. I would not have been opposed to timely foreclosing benes lowering their prices of several REO SFRs in one tract to be sold in bulk 3-5 yrs ago or even now! Those deeply-discounted sold comps of yesteryear would have been behind us now. I also think there are more qualified buyers out there today than there are listings or “desirable listings” so more REOs flooding the market would add more inventory to select from.

In sum, underwater homeowners who are potential strategic defaulters now see and hear all of these things going on around them:

* short selling and excess debt being forgiven;

* defaulting and pretending to apply for a mod whilst squatting for 28-38 months;

* receiving a “trial mod” at artificially-low interest rates (=<2%?) and making the new payments while still retaining ownership of “their” property;

* each indiv on title file for BK in succession to temporarily stave off foreclosure and live free longer;

* hire a scumbag attorney to “prosecute” a MERS lawsuit on their behalf (past tactic), again, to live free longer;

* and, stop paying on trial/permanent mod granted to them to see how long it will take their lender(s) start the foreclosure process all over again (again, buy more time to squat), etc.

Why wouldn’t potential strategic defaulters want to give this game a whirl? It’s “worked” for so many … why not get a piece of this pie for yourself??

Every single tactic used by these opportunist home-debtors is employed for one purpose only. That is to be able to “squat” as long as possible. It has nothing to do with “worrying about their credit score” or “emotional attachment.” I could see becoming “emotionally attached” to a house with a Mills Act contract or one that you bought as a hull and spent 3000 hrs of your own backbreaking labor putting back together yourself. But NOT on a “late-model” tract mcmansion that looks like every fifth house on your street!

The rest of us “head-down” owners just want it all over with so we will be able to move on with our lives without losing our downpayment of 10-20 yrs ago. At this rate, it will take another decade-plus to transfer all of the “distressed” inventory into stronger hands. The hands it transferred out of will have to hit the road to find a cheaper locale to rent in if they can’t afford to rent here.

That’s the way its always been.

[bearishgurl]

Questions for HLS, ctr70 or Pigg in the lending biz:

Re: the “pick-a-pay 30 due in 5” I/O and/or subprime programs, what was the last year this program was offered, and;

Re: the “pick-a-pay 30 due in 7” I/O and/or subprime programs, what was the last year this program was offered.

Thanks for your expertise!

[bearishgurl]

…Rob Magnotta, a real estate agent, recently listed his two-bedroom Irvine condominium for rent on Craigslist for $2,300. He had six applicants within 24 hours, including one who wrote a poignant letter about losing a home to foreclosure.

“It was almost too easy,” said Magnotta, who chose another renter. “I know the rental market was strong. But until you are actually renting the place, I think you are surprised it is that strong.”

http://www.latimes.com/business/la-fi-renters-nightmare-20120506,0,7137775.story

Yada, yada, yada …. whine, whine.

“Foreclosure victims” ALL have “poignant stories” (as do those who have done what it takes to keep their properties above water and hold onto them).

It’s the credit score, stupid! Why would ANY “foreclosure victim” think THEIR credit score would win out on a rental application over other prospective tenants who didn’t over extend themselves??

[an]

[quote=Dr. Paul]No, actually I don’t feel sorry for them at all. As a current landlord and potentially even more so in the coming years, I do hope rent keeps going up… In fact I hope it skyrockets….

Personally, my living costs are going down with the ever decreasing mortgage rates and generally paying down the loan debt…Meanwhile, my income definitely is staying steadily if not gone up a bit during this time, as I have tacked on more passive income… (I was able to gain 1 rental property from this meltdown…And possible more in the future)…

And relatively speaking, stupid people that did stupid things for the matter have to deal with their consequences these days. They’re starting to finally get foreclosed on… They get to pay for higher rent now…to people like me…And a lot of them, the credit spigot is now off. They’re gonna miss out on the these killer cheap credit that will enable responsible people like us to grow our net worth…..

For the first time, I actually think people that have been financially responsible are starting to get the upper hand…,

Cheer up folks…It’s not all that bad for people that’s been responsible.[/quote]
I totally agree and that’s my sentiment exactly. It’s about damn time and I hope rent skyrockets.

[outtamojo]

[quote=AN][quote=Dr. Paul]No, actually I don’t feel sorry for them at all. As a current landlord and potentially even more so in the coming years, I do hope rent keeps going up… In fact I hope it skyrockets….

Personally, my living costs are going down with the ever decreasing mortgage rates and generally paying down the loan debt…Meanwhile, my income definitely is staying steadily if not gone up a bit during this time, as I have tacked on more passive income… (I was able to gain 1 rental property from this meltdown…And possible more in the future)…

And relatively speaking, stupid people that did stupid things for the matter have to deal with their consequences these days. They’re starting to finally get foreclosed on… They get to pay for higher rent now…to people like me…And a lot of them, the credit spigot is now off. They’re gonna miss out on the these killer cheap credit that will enable responsible people like us to grow our net worth…..

For the first time, I actually think people that have been financially responsible are starting to get the upper hand…,

Cheer up folks…It’s not all that bad for people that’s been responsible.[/quote]
I totally agree and that’s my sentiment exactly. It’s about damn time and I hope rent skyrockets.[/quote]

The last 2 years I’ve had to pester the my renters at my higher end rental house to renew the lease. This year, they called 3 months before end of lease and asked ME if they could renew.

[fat_lazy_union]

It’s not just in L.A…It’s in SD…

This is my bellweather for rental prices in Mira Mesa….

http://gables.com/find/apartment/441-gables-summerset-san-diego-ca

One word to describe it: ouch…

1 Bedroom 500 sqft
39 2 10530 500 $1220 – $1535 10 Jul 2012
53 2 11134 500 $1255 – $1725 7 Jun 2012
44 1 10778 500 $1235 – $1405 Now
48 2 10946 500 $1230 – $1410 19 May 2012
44 1 10746 500 $1210 – $1565 30 May 2012
53 2 11126 500 $1230 – $1730 21 Jun 2012

1 Bedroom 645 sqft
49 1 10996 645 $1330 – $1720 30 Jun 2012
36 2 10434 645 $1360 – $1895 11 Jun 2012

2 Bedroom 767 sqft
04 1 11073 767 $1395 – $1825 Now
15 2 10771 767 $1420 – $1850 Now
29 2 10391 767 $1440 – $1870 Now
15 2 10775 767 $1420 – $1850 Now
07 2 11011 767 $1440 – $1870 Now
24 2 10535 767 $1420 – $1850 Now
27 2 10451 767 $1440 – $1870 Now

2 Bedroom 878 sqft
12 2 10875 878 $1625 – $2120 Now
23 2 10595 878 $1625 – $2120 Now
13 2 10847 878 $1625 – $2120 Now
21 2 10631 878 $1625 – $2120 Now
23 2 10575 878 $1625 – $2120 Now
27 2 10459 878 $1625 – $2120 Now
11 2 10895 878 $1625 – $2120 Now

2 Bedroom 917 sqft
40 2 10566 917 $1655 – $2150 Now
40 1 10536 917 $1650 – $2145 Now
49 2 10974 917 $1655 – $2150 Now
35 2 10386 917 $1655 – $2185 21 May 2012
50 1 11024 917 $1630 – $2125 Now
50 2 11010 917 $1655 – $2185 24 May 2012

Keep in mind this is a 1 year lease. Add roughly $200/month for 6month… The high end of the price range is for 3months

Rents gone up by about $50/month since March timeframe, on top of what I would already consider higher rent prices…
No wonder at the end of Mira Mesa Blvd and 15, some builder is rushing to build a new apartment complex…
It probably also why inventory is low in MM. If this is Mira Mesa condo rent, I can’t imagine what rent must be like in Carmel Valley right now.

..Wish I had deeper pockets. I really wish I did at this particular moment right now…Anotehr 4-5 units would be a great thing… I’m reaching a point if something good comes up, I’m saying to myself, buy it now, figure out how to pay for later by borrowing, begging, stealing (ok maybe not the stealing)….

[Author]

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