[Allan from Fallbrook]

Pasadena Broker: Just curious about something. As someone in the biz, what are you seeing relative to loan industry reaction from the inside?

I have friends in the banking biz, but mainly on the investment banking side and the reaction is somewhat different, and mainly focusing on the number of deals that have just gotten pulled from circulation.

How much of an impact is this credit crunch having, and how is it impacting your business directly? If your handle is correct, you are operating up in Pasadena, which has traditionally been a very solid market.

Again, just curious.

[Allan from Fallbrook]

Pasadena Broker: Just curious about something. As someone in the biz, what are you seeing relative to loan industry reaction from the inside?

I have friends in the banking biz, but mainly on the investment banking side and the reaction is somewhat different, and mainly focusing on the number of deals that have just gotten pulled from circulation.

How much of an impact is this credit crunch having, and how is it impacting your business directly? If your handle is correct, you are operating up in Pasadena, which has traditionally been a very solid market.

Again, just curious.

[Allan from Fallbrook]

Bob: I had friends who were liberal democrats, too! But I shot them all and buried them in my backyard!

Kidding. However, one issue that really needs to be dealt with in this country is the absolute lack of leadership from either the Republicans or the Democrats regarding fiscal policy and restraint. Greenspan (and now Bernanke) and the FED have been running this country for 18+ years with literally no meaningful oversight from either the President or Congress.

No one on either side of the aisle in Congress or in the Executive Office wants to cowboy up and tell the American people some hard truths: We have pissed away our economic independence through truly bad monetary decisions, we are no longer a creditor nation, we are no longer a manufacturing powerhouse and we have progressively destroyed the middle class over the last thirty years.

This is the “third rail” of American politics and, with the exception of Ron Paul in the recent debates, not one candidate in either party has had the stones to step up and speak the truth.

While I count myself as a conservative Republican, their behavior has been just as unconscionable and reprehensible as the Dems.

This country truly needs an enema (economically speaking) and the average American needs to understand that sometimes not every one of your avaricious little whims is going to be met and your egocentric, narcissistic little life comes with both costs and responsibilities.

[Allan from Fallbrook]

Bob: I had friends who were liberal democrats, too! But I shot them all and buried them in my backyard!

Kidding. However, one issue that really needs to be dealt with in this country is the absolute lack of leadership from either the Republicans or the Democrats regarding fiscal policy and restraint. Greenspan (and now Bernanke) and the FED have been running this country for 18+ years with literally no meaningful oversight from either the President or Congress.

No one on either side of the aisle in Congress or in the Executive Office wants to cowboy up and tell the American people some hard truths: We have pissed away our economic independence through truly bad monetary decisions, we are no longer a creditor nation, we are no longer a manufacturing powerhouse and we have progressively destroyed the middle class over the last thirty years.

This is the “third rail” of American politics and, with the exception of Ron Paul in the recent debates, not one candidate in either party has had the stones to step up and speak the truth.

While I count myself as a conservative Republican, their behavior has been just as unconscionable and reprehensible as the Dems.

This country truly needs an enema (economically speaking) and the average American needs to understand that sometimes not every one of your avaricious little whims is going to be met and your egocentric, narcissistic little life comes with both costs and responsibilities.

[Allan from Fallbrook]

Bob: I had friends who were liberal democrats, too! But I shot them all and buried them in my backyard!

Kidding. However, one issue that really needs to be dealt with in this country is the absolute lack of leadership from either the Republicans or the Democrats regarding fiscal policy and restraint. Greenspan (and now Bernanke) and the FED have been running this country for 18+ years with literally no meaningful oversight from either the President or Congress.

No one on either side of the aisle in Congress or in the Executive Office wants to cowboy up and tell the American people some hard truths: We have pissed away our economic independence through truly bad monetary decisions, we are no longer a creditor nation, we are no longer a manufacturing powerhouse and we have progressively destroyed the middle class over the last thirty years.

This is the “third rail” of American politics and, with the exception of Ron Paul in the recent debates, not one candidate in either party has had the stones to step up and speak the truth.

While I count myself as a conservative Republican, their behavior has been just as unconscionable and reprehensible as the Dems.

This country truly needs an enema (economically speaking) and the average American needs to understand that sometimes not every one of your avaricious little whims is going to be met and your egocentric, narcissistic little life comes with both costs and responsibilities.

[Allan from Fallbrook]

I think it does have to do with trying to control the number of REOs hitting the market at once. However, at some point, the banks are not going to have a choice.

They are required to cut their losses on non- and sub-performing assets and, as most bankers will tell you, banks do not like being in the real estate business. As the number of REO properties pile up on individual balance sheets, the banks will realize that they have no choice but to bite the bullet and dump their REO portfolio.

I think there will be at least one bank that will take the lead and be the first to “fire sale” their REO portfolio and that would potentially trigger the rest.

When you look at the numbers, you are seeing tens of thousands of properties throughout the State of California that are going back to the bank. At some point, these properties will have to be unloaded by the banks. The question is when, and how, and what effect this will have on pricing.

[Allan from Fallbrook]

I think it does have to do with trying to control the number of REOs hitting the market at once. However, at some point, the banks are not going to have a choice.

They are required to cut their losses on non- and sub-performing assets and, as most bankers will tell you, banks do not like being in the real estate business. As the number of REO properties pile up on individual balance sheets, the banks will realize that they have no choice but to bite the bullet and dump their REO portfolio.

I think there will be at least one bank that will take the lead and be the first to “fire sale” their REO portfolio and that would potentially trigger the rest.

When you look at the numbers, you are seeing tens of thousands of properties throughout the State of California that are going back to the bank. At some point, these properties will have to be unloaded by the banks. The question is when, and how, and what effect this will have on pricing.

[Allan from Fallbrook]

I think it does have to do with trying to control the number of REOs hitting the market at once. However, at some point, the banks are not going to have a choice.

They are required to cut their losses on non- and sub-performing assets and, as most bankers will tell you, banks do not like being in the real estate business. As the number of REO properties pile up on individual balance sheets, the banks will realize that they have no choice but to bite the bullet and dump their REO portfolio.

I think there will be at least one bank that will take the lead and be the first to “fire sale” their REO portfolio and that would potentially trigger the rest.

When you look at the numbers, you are seeing tens of thousands of properties throughout the State of California that are going back to the bank. At some point, these properties will have to be unloaded by the banks. The question is when, and how, and what effect this will have on pricing.

[Allan from Fallbrook]

SD_R: Thanks. Since I have you on the line, what about the lag effect in reporting? My understanding on the majority of these numbers is that they are somewhat aged, meaning we are “looking in the rearview mirror” as regards some of these statistics.

Also, it appears that the real weight of the sub-prime resets is about to felt, starting in October 2007 and forward.

If this is true, and financing is both more difficult to acquire and more expensive once you do, and we are heading into the slow season, the real ugliness has yet to manifest itself, correct?

[Allan from Fallbrook]

SD_R: Thanks. Since I have you on the line, what about the lag effect in reporting? My understanding on the majority of these numbers is that they are somewhat aged, meaning we are “looking in the rearview mirror” as regards some of these statistics.

Also, it appears that the real weight of the sub-prime resets is about to felt, starting in October 2007 and forward.

If this is true, and financing is both more difficult to acquire and more expensive once you do, and we are heading into the slow season, the real ugliness has yet to manifest itself, correct?

[Allan from Fallbrook]

SD_R: Thanks. Since I have you on the line, what about the lag effect in reporting? My understanding on the majority of these numbers is that they are somewhat aged, meaning we are “looking in the rearview mirror” as regards some of these statistics.

Also, it appears that the real weight of the sub-prime resets is about to felt, starting in October 2007 and forward.

If this is true, and financing is both more difficult to acquire and more expensive once you do, and we are heading into the slow season, the real ugliness has yet to manifest itself, correct?

[Allan from Fallbrook]

sdrealtor: What effect will the new lending guidelines (lack of secondary markets for non-conforming loans) have on SD county real estate in your opinion?

Lots of differing opinions out there, but you are in the biz, so I am curious about yours.

Having a finance background and looking at this from an Econ101 vantage, I would think the inability to secure financing (or having to secure financing with a high cost of funds a la the Wells Fargo 8% Jumbo), would have a major impact on RE.

[Allan from Fallbrook]

sdrealtor: What effect will the new lending guidelines (lack of secondary markets for non-conforming loans) have on SD county real estate in your opinion?

Lots of differing opinions out there, but you are in the biz, so I am curious about yours.

Having a finance background and looking at this from an Econ101 vantage, I would think the inability to secure financing (or having to secure financing with a high cost of funds a la the Wells Fargo 8% Jumbo), would have a major impact on RE.

[Allan from Fallbrook]

sdrealtor: What effect will the new lending guidelines (lack of secondary markets for non-conforming loans) have on SD county real estate in your opinion?

Lots of differing opinions out there, but you are in the biz, so I am curious about yours.

Having a finance background and looking at this from an Econ101 vantage, I would think the inability to secure financing (or having to secure financing with a high cost of funds a la the Wells Fargo 8% Jumbo), would have a major impact on RE.

[Allan from Fallbrook]

Bugs: I cannot speak for Seattle, but the SF/Bay Area has always seemingly had the ability to defy gravity when it came to pricing. It apparently still does: Mountain View (right outside Palo Alto) just set a record for home sales. There are properties throughout Los Altos and Palo Alto that are in the nosebleed range and staying there.

As to whether that market will correct or not is anybody’s guess. It did following the NASDAQ bust, and viciously.

I agree wholeheartedly with your assessment as to the underlying economics of the San Diego area. While it certainly has a tech/biotech core, it represents nothing even close to what the Silicon Valley has in terms of both high wage employment and the number of large and very profitable companies domiciled there. One of the explanations regarding Mountain View’s recent surge is that Google is on a hiring tear.

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