Labor Day conversations at the barbeque

[LA_Renter]

Right now housing collapse articles are shooting out of the MSM like a machine gun. Makes you wonder if these journalist are regular posters on the bubble blogs. Much of the content looks like posts on here or Ben’s blog It’s refreshing to see these articles come out basically because its just the truth. Even the NAR leaked a PPT presentation about the upcoming correction and that yes home prices do come down, although they still said soft landing. which is a joke.

I also think the timing of the barrage of housing collapse articles is very significant. Home selling season is mostly over now, people are headed into the Labor Day weekend and many of the conversations around the barbecue will be centered on RE and these idiotic loans. At this point somebody’s close friend, sibling, cousin, uncle, mother, son etc is in over their head on RE and are sweating these resets. I see it in my family, my aunt may have to walk away from her property in Florida that was going to make her rich (thats what they were talking about at the barbecue last Labor Day). She could possibly take a $200K hit and wipe out her credit, she is 70 years old. The reality of this market is now hitting home. This is a pivotal moment where the last veils of denial are being lifted, although many will hold on. Word of mouth can be far more powerful than any blog or MSM article. I anticipate that the downturn will accelerate from this point on. Conscientious parents will persuade their children to hold off on that home purchase right now and stay away from those damn ARMS. At this point one could say “friends don’t let friends buy California RE”. I sense that we are closing one chapter and opening a new one this Labor Day weekend.

[sdduuuude]

“friends don’t let friends buy California RE”

HAHAHAHAHAHA. I LOVE IT !

[barnaby33]

Oh come on LA Renter, we are along way from the last veils of denial being ripped away. Two years at least. Especially if the Fed lowers interest rates. It won’t save the housing market, but it will prolong the wearing of veils.

As far as your 70 year old aunt, was she counting on the house as her retirement nest egg? Does she have a fallback? I wonder how many people are in this boat? My mom is 70 and poor, but at least she has me and a very kind ex-husband.

Josh

[LA_Renter]

Josh

This is speculation here but think about this. Business Week had an excellent article on the Nightmare Mortgage. Probably one of the best articles to date concerning the topic of exotic loans. It had teeth. There is a reason they came out with that article along with all of these other articles concerning housing and that’s because the bulk of these exotic loans are beginning to reset now. From what I have read over 1 trillion dollars (I always think of Dr Evil with finger to mouth) will reset. Thats a big number impacting a large number of people. Now going back to the example of my aunt, her situation has sent shock waves throughout my family’s communication network. I see my family 2 to 3 times a year and the last couple of years they would just look at me cross eyed about my housing bubble views, Kind of like (has that boy gone crazy out there in California). My last visit in August all that changed among all the adults in my family, sisters, aunts, uncles, cousins. Now they are asking me questions about what I think will happen. They were in denial, then they saw what can happen with my aunt. They didn’t read that or see it on TV, it was somebody they know and care about. Now multiply that story by the number of people that will go into some form of default and foreclosure over the next 18 months. Also combine that with officially showing YOY price declines starting this Fall. Also combine that with the internet age of blogs. This thing is far beyond the FED easing a 1/4 point.

Regarding my aunt, yes she was counting on this investment as her retirement, she may be able to salvage one house with a little equity in it and she has two daughters that will look after her. She is still self employed with some income but this has been an extremely painful experience.

[rocketman]

Hi there neighbor…

You know, after reading this blog and watching RE in San Diego… well, we might just end up moving down there ourselves after this bubble pans out. Do you think there will be any nice 3 bedroom condo’s with a dock and view in a nice marina for let’s say… $300k? Look for the next big boom to hit SD first. Have a nice BBQ weekend!

[barnaby33]

I just ran into a friend of mine at the Hillcrest farmers market. She was really bummed out. She was having some serious family problems. On top of which she admitted that the one bedroom condo she bought for 280 in july of 04 has now depreciated about 60k. I tried to tell her about the RE bubble when she bought, but for naught.

Unlike most who speculated, she can at least afford it, but that hurts when you see these predictions come true.

Josh

[mixxalot]

What about places like Malibu and Ventura in Los Angeles and Ventura county? Do you think these areas will experience a downturn in housing prices for real estate? It seems like the very rich don’t care about paying too much for a home to live in an exclusive area like Malibu, Beverly Hills or Pacific Palisades .

[speedingpullet]

The things I’m seeing from that part of LA is that, while prices are not coming down (or coming down by a few thousand every couple of months), houses simply aren’t selling. The 1mill+ places just aren’t shifting.

Lots of 100+ DOMs in 90265.

As to whether the sellers can afford it? I guess if you’re that rich, then a few more months won’t matter.

[Author]

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