Why would I buy in San Diego now…

[lendingbubblecontinues]

Welcome to the 21st century….where fraud is apparently considered to be a market force.

Fraud drove the prices the last several years. Enforcement action should help to drive it (down) the next several.

[sdrealtor]

Fraud is not a market force but rather a response to market forces. Anywhere that you find money to be made in a capitalistic society you will find fraud as well.

[23109VC]

hey i know how you feel. I’m also an attorney…and make decent money. luckily, i live/work int he temecula area..and up here that 2500-3500 mortgage payment WILL get you into a nice house that you would be proud to call a home…BUT prices are falling here too..

AND you can renta lot more house for the money.

a 2500 payment will get you inot a low 400k home. 3500 is what you’ll be spending on the 500-550k home… keep in mind property taxes are usually 2% up here in the newer areas… 🙁

but you can RENT a 750-850k home for $2500/month or less.

right now, it’s cheaper to rent than buy as well. so keep renting. when the costs of renting get closer to the costs of buying, then it maks sense to buy.

[Andrast]

Why does everyone think it has been fraud that has inflated pricing so much. I can see some speculative buyers bringing up the pricing a little, but I’m not understanding the theory that there are a select few who have made out like bandits here. The speculators are taking on risk too.

What am I missing?

[lendingbubblecontinues]

Without “stated income” and/or “no income, no asset” (nina) loans…the playing field can be level.

For Harry Howmuchamonth it didn’t matter what the price was…only the payment. With ridiculously low starter rates of 1% APR, Harry Howmuchamonth was perfectly happy to engage his cousins (the millions of other Howmuchamonths out there) in bidding wars for properties that appeared they could only go UP in value.

In recent years, since 90% of stated income loan applicants overstated their income AND 60% of stated income loan applicants overstated their income by 50% or more you should be able to connect the dots here to see what we are talking about. (Somebody help me out with the name of the study that supports these numbers. I believe it was for 2005 applicants…2006 was likely more fraudulent.)

Definition- Overstate your income so that you can buy a house more expensive than the one you actually qualify for=fraud.

Now…these people are going to get completely fried and they deserve to. Did I really need to explain that to anyone?

[SHILOH]

The bottom line on this run-up of prices was greed in one form or another. If the banks had stuck to fundamentals regarding earnings and affordability…it would have kept prices normal. No one could buy something they could not manage financially.

I read recently that the housing bust is not expected to affect the rest of the economy…that real estate and housing is an entity separate from the rest. But how can that be when there is no discretionary income left to pour into the economy. I am not savvy on economics…so I am uncertain what to expect.

Even if you are a lawyer making a very good living and can actually afford $500K for a cr*P property that you don’t want….those homes are way out of reach for lower income people who might settle for that, just to be independent of a landlord. But the median is $50K….they can’t come close to affording that.

THe city of SD is broke and the middle class there is being squashed.

[TheBreeze]

One reason people suspect that fraud had a major impact on prices is this $1.2 billion dollar fraud scheme in Temecula:

http://www.emediawire.com/releases/2007/1/emw497285.htm

The article says that as many as 5000 residential homes could go into foreclosure within the next several months. Many of us believe that this scheme is just the tip of the iceberg and many other fraudulent schemes will be uncovered as prices continue to go down.

[Andrast]

Thanks TheBreeze. Interesting read and very shameful.

[BuyerWillEPB]

To Andrast:

It was more than just speculators. It was also a few real criminals, and more importantly, the lenders themselves.

“Underwriting standards for sub-prime loans have been too low for at least a year, resulting in loans being issued to borrowers who have little chance of paying them back, Shaughnessy said.”

The lenders knew all along the borrowers could not afford to pay back the loans. That implies fraud.

[Andrast]

That makes sense. I remember talking to lenders and them telling me how much I could ‘afford’ doing all sorts of various tricks… stated income, etc. I always thought it was strange they could tell me I could afford some rediculous payments. I would always say: no… I can’t afford that.

Seems like a combination of lenders, realtors, and ill-informed consumers. The perfect frenzi storm. Not to mention the ponzi schemers I just read about. Crazy stuff.

I’ve worked with many real estate agents. It shows how important it is to work with the right one. They should be looking for the best interest of the customer, not themselves. I guess that goes for the lender too. I can see all of the greed now.

Too bad they don’t make the real estate agent exam much harder. That thing is a joke. And, these ‘agents’ are advising people on probably the most expensive asset they own.

[Author]

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