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I think you read way too much into Steve’s comment. He was specifically talking about the impact of increased competition among resales in a subdivision that is still under construction. I thought the comment was both accurate and very supportable with the data.

He did not suggest that there would be neighborhoods that are immune or insulated from a collapsing price structure.

Steve and I disagree as to the extent of the market correction but we don’t disagree that all the segments of the housing market here are ultimately connected and that all will be affected to one degree or another by widespread price corrections.

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They might be “representative” but I’ll bet every one of those examples was made up. The 4s Ranch home pruchased at $950k has not dropped anywhere close to $650k by now. And who would characterize a homeowner whom they were citing as an example an article as having “perky breasts”?

All these examples are just a little too convenient. I’m taking it with a grain of salt.

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I guess when the stock market takes off running we’ll have our answer.

How long do you think we’ll have to wait before that happens?

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Several households in my wife’s extended family are involved in RE in one way or another. Including ours. Over the weekend I had a conversation with one of my brothers-in-law, who is a landscaping contractor. I gave him the “piggington lite” version of it and told him that many people currently involved in RE and construction and related occupations were going to be struggling. I wasn’t trying to scare him but I could see the wheels turning in his head. By the time we were done, there was some talk about diversification. Mission accomplished.

I didn’t bother discussing the subject with the other relatives. They’re not ready to consider how fragile their positions are just yet.

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The wife mentioned on camera that she was going to go get a gun. Under the circumstances that’s not a threat to be taken lightly. Before this all went down, the guy being interviewed was talking about being threatened and abused.

The reporter did the right thing by not fighting back. He had the presence of mind to know the camera was still running and that any amount of agression or hostility, verbal or otherwise, would have been spun into making it look like mutual combat rather than outright assault.

Because he held back the attorneys for the agent and his wife are now faced with a much more difficult defense. The prosecution can probably run down a number of people who have also been threatened.

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I knew a guy (friend of mine) who was involved with one of these places a couple years ago. It was JUST like that video. Young kids, counterculture types, car salesmen, the whole bit. My friend was involved peripherally with the company and he’d call me to ask questions about appraisal stuff.

The way they ran their program was they’d start the kid out on the phones doing telemarketing – and you don’t even want to know how they got their lists. If the kid could last 30 days and bring in some qualified leads that closed they’d move up to account rep where they’d spend their time doing the grunt work on those leads. Enough of those and they’d move up to account manager where they were running their own team.

This company would not write a loan unless they could net at least $10,000 out of it. Some of these 18-year old, 22-year old high school dropouts were making $10,000, $15,000 and even $20,000 a month. Living large, bling bling and all that but most of them had no clue what to do with that kind of money.

The guys running the company were the most arrogant bastards I ever met. They hit me up to be their local appraiser, to which I politely declined because I was “too busy”. Truth is, I didn’t want my name associated with any of their paper. My participation was limited to giving technical advice on a couple occasions.

My friend lasted there about 6 months before he realized he couldn’t turn these guys around. So much for that plan. When he left they had about 150 employees, were leasing an entire floor in one of the high rises in Sorrento Valley, and the owners were swimming in cash. Needless to say, that company is gone now. It imploded about 6 months after my friend left, which would have been in early 2005 or so.

I’m sure those guys are still out there, though, hitting the phones everyday.

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Caught on tape. Talk about being owned.

I saw it earlier this morning. The wife started it and the husband came along and took it to a whole other level. He looks like the kind of guy who commonly gets agressive with people to get what he wants. Guess he’ll have to find some other way to express himself now.

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As far as I can tell, nobody here has ever made any predictions about the limitations of technology.

You do bring up an excellent question, though:

“The next time you want to assert you know with absolute certainty what’s going to happen in the future, ask yourself, “Do I know my subject better than these guys knew theirs?”

You possibly should have asked the bulls this excellent question when they were making their wild and unsupportable predictions up until just a year ago.

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I’m back and it is exactly as I suspected when I saw the name. I know exactly who this is and why he isn’t trying to break into the business anymore, and it has nothing to do with him thinking this is a crooked business. I’m glad he didn’t make it into the business, because in my opinion if he had gotten his own license it was his intention to run the most crooked shop in town. He would have never known how to do it the right way because he never worked with that type of appraiser or with that type of client.

His problem with the licensing program was that he thought he was too smart to need to adhere to the experience requirements to earn his license. He even goes on about it in this article. He’s a guy who worked and had some success in corporate America and thought that having to gain experience under supervision was demeaning to someone like him.

As for whether he actually is smarter than the average trainee, he told me a couple years back that I was stupid for thinking there was risk in the market trends because “this is San Diego and values never go down here”. Smart guy, huh?

The investigation that was underway when he resigned his trainee license involved, by his own admission, allegations that he violated our professional ethics as well as applicable regulations involving his license.

You folks are smart enough to read for content and make your own decisions about credibility, but allow me to say that among appraisers this guy is considered to be the ultimate troll.

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I’ll post this comment before I read the piece. The name “Stephen Bishop” is a penname used by an older gentleman here in SD who has attempted to get into the appraisal business on two separate occasions (1994 and 2002) but was unable and/or unwilling to do it the right way. He is not now and never has been an appraiser in his own right.

He obtained a Trainee license a couple years back, associated with a couple of crooked appraisers (because those are the only types of people who will cut a trainee loose without any supervision) and then complained to the state that these guys were doing bad things. In doing so, he attracted attention from the state on his own substandard work, resulting in an investigation for violation of applicable regulations and ethical violations. He resigned his license while under investigation.

If the author of this piece is the same individual I’m talking about, you may consider his opinion to be uninformed and contaminated as a result of his choice of associates and his persistent efforts to get around the licensing requirements for appraisers here in California. Now, he mostly writes anonymous hit pieces speaking of massive corruption among all appraisers from the privacy of his 2bd apartment over in Clairemont (if he’s still living there).

I say all this and yet I also acknowledge that there are problems in the appraisal business, there are some crooked appraisers and the state has licensed many more trainees than our economy can absorb in the next 10 years. But not everyone is crooked and not every trainee has to sell out in order to make it into the business.

Now I’ll go read the piece and see what it has to say.

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That’s a good question for which I have no answer. I THINK a lender like WaMu is more likely to retain market share, even in a declining market. I know they do a large percentage of the high-dollar mortgages here in SD County and they’re hooked in as the primary mortgage lender on several of the new home subdivisions.

I know that about 50% of the appraisals WaMu was sending out for field reviews were getting cut and those loans were not being made. Many of those would now fly through the AMC reviews because they take so many shortcuts. If it’s bad to take shortcuts in an appraisal, it’s 5 times worse to do it in a review.

To be sure, a bad appraisal and an overencumbered property do not make for an automatic loss, but it does increase the odds when the borrower has little or no skin in the game and the markets are in decline.

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A little tidbit to keep in mind about WaMu: They just laid off their entire appraisal staff, including their supervisors and managers. For most of their employees, their final day is 09/12/2006.

WaMu has contracted with 2 appraisal management companies (LSI and E-Appraiseit) to perform all appraisal and review functions. The fee appraisers who were working directly for WaMu were already cut off, and those who have no other options have already started working for the AMCs, at fees that are 35% – 50% less than what they were getting before. Nobody on the appraisal side of this sees this move as having good results.

I’ve had occasion to speak with a couple of the soon-to-be laid off local managment as well as a couple of the already-laid-off fee vendors, and everyone I’ve spoken to is deeply angry and resentful. Since they now have to do a lot more assignments to make the same amount of money, and since the AMCs are notorious for constantly harrasing their appraisers with 5x daily phone calls and lowball fees, there’s a lot of scheming going on right now on how to do the absolute minimum amount of work necessary to collect the reduced fee. Time is money. Unlike before, most of these people are not taking the position that the company’s exposure to bad loans is a high priority.

I’m already hearing real horror stories about how bad some of these AMC appraisals going to WaMu are. The AMCs are notorious for failing in their review functions and meddling with those appraisers who are trying to complete their due diligence. They’re quite candid that their priorities are about getting appraisals back fast and cheap, everything else be damned.

In the appraisal community, most of the AMCs are generally reviled as parasites, and the people who choose to work for them have often been characterized as being the bottom of the barrel. Lots of really inexperienced appraisers and has-beens who can’t find work anywhere else.

Bottom line here is that WaMu’s exposure to fraudulent loans and poorly developed appraisals is skyrocketing at a critical time. They could not have picked a worse time to give up on appraisal quality. They should be tightening up their standards at this juncture, not gutting them.

Another thing I’m hearing is that WaMu is rolling out a new loan program that will more easily enable overencumbrance of properties. This is also a poor decision (on a long term basis) to be making at this time.

It’ll probably take a while before any of these decisions come back to roost, so it may not figure into your decisions to short right now. But sooner or later these decisions are going to cost them – big time.

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I don’t deny the landfill issue could cause additional declines over there as compared to areas without that problem. However, I have to also note that it didn’t seem to hurt them much 18 months ago when the market was still moving along. If they start having a lot of media coverage about odors escaping the remediation barriers or soil subsidence then that would make things worse than they already are, but other than that I just don’t see the landfill issue being a big factor.

Much of the redevelopment areas in downtown San Diego is subject to “the blob”, a 20-block sized petrochemical plume that’s been floating around for a number of years. I don’t notice that as being a significant factor in marketability down there.

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“Past returns are no guarantee of future performance. Buyers should be aware that the RE market in this region has suffered significant losses of 10% or more during two time periods in the last 20 years and will likely suffer additional losses at least once in the next 20 years.”

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I wouldn’t say Bressi is a bad place or that it’s any more overvalued that anywhere else in Carlsbad. The aircraft noise they have going there isn’t nearly as bad as over in Scripps or UTC with the Marines at Miramar. It’s not like you’d be prompted to keep your windows closed all the time. They aren’t directly under the take-off or landing pattern at Palomar so there’s little extra risk of a plane crash.

One aspect that makes Bressi a little more desirable than San Elijo is the better proximity to freeway access and services. That difference can save a person 20 minutes a day in commuting time (compared to San Elijo) if they travel those roads during rush hours. That’s worth some money to many folks. Another aspect is that it’s a little more exposed to the coastal breezes.

The main reason I like to watch Bressi is because they have lots of units with several different size ranges in one place and they have a reasonably desirable location compared to a lot of the other new subdivisions going up. Any problems they have there are not going to be attributed to its location in a landfill or in association with inland areas like Escondido. It’s all going to be about the general market conditions.

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