[Coronita]

Gosh. I'm trying to figure out how this thread attracted so much attention. And ironically, the original poster doesn't appear to have responded beyond the first page. We're on page 4.

 

Look, no offense folks, but it's Labor Day for Christ sake. Go out and have some fun. I had a great weekend. Did some good ole bbq. Also found out that it is entirely possible to make a sunny side up eggs  on a backyard flagstone this weekend :).

 

[Coronita]

Me no speaka propra engrish. Me speaka engrish and drive rincolns and roldsmobiles.

 

[Coronita]

So you think that the all of the 200K plus individual (key distinction there) earners who bought 10 plus years ago in Carmel Valley won't be affected by what is happeing right??

Get Your Head Out Of Your A**!!!

Unless people here start waking up to the reality of what's going on in the macro environment you will be affected no matter if you are an FB or a died in the wool housing bear.

 

I don't think anyone is disagreeing with you that everyone will be somehow indirectly affected. But it's all relative to everyone else.

What's the fascinating with $200k households and hedge funds? The two don't compute in my book. A $200k or even $300k household income doesn't by itself give one access to hedge funds. There are other financial requirements to qualify, yes/no?

401k. So this is were I would go and say that a properly diversified portfolio shouldn't have an issue if part of your investment choices get wiped out.

 

Money market funds: Note to self. Move the last $3000 out of a GMAC demand note account into a FDIC insured bank.

 

[Coronita]

These folks are fighting back. Good for them I hope they stick it to the fraudsters. The fraudsters need to go to jail for a long time. http://www.coreclient.110mb.com

 

I bet the scammers  are probably smarter than most people think. They probably already tucked much of what they took in offshore accounts, derivatives, under other names etc and pooof. All the "investors/victims" money disappear. I doubt any of the people that lost money will get most of it back.  Sorry, it's not pleasant saying this, but it's reality. As far a jail time, I doubt they'll get more than a slap on the wrist and possibly revocation of a few licenses.

 

[Coronita]

This thing involves about 2,400 houses! Most likely, all or most of the 2,400 will foreclose or become short sales. Another nail in the housing market's coffin. I wonder how long it will take before these things really start foreclosing en-masse.

 

Yes, this would be an issue in this area. But to correct, the nail is this particular area's housing market. 

[Coronita]

Whats so bad about Texans?

I personally have found most folks from Texas to be more friendly, less materialistic and mellow that the so called native Californians and east coast transplants to San Diego and California.

I will have to see what San Antonio and Austin are like in Texas. Dallas is ok but a big city and major traffic. I have time on my lease to travel and check it out. Much cheaper than California!!! The spiders and bugs worry me but we have bugs in California too.

 

A state that produces a president like Dubya is worth boycotting for 10+years in my book. Sorry, not trying to turn this into a political pissing match. Anyway, stopping in San Antonio a few times, I would say if I  were white, I wouldn't mind it there. But, as a "minority", I don't think I'd like living there. Can't tolerate the summers and humidity either.

[Coronita]

FLU I think the reasoning on the IO loan is to conserve cash for dp on the detached home down the road. It is not a question of being upside down in the future, he will be upside down and most likely not be a little. However the condo will be kept and turned into a rental. The problem there is negative cash flow which indeed could be more substantial then at first glance. This is by far one of the largest underestimations first time landlords make.

One other disturbing thing about condos that "may" occur. Given a large complex that will undergo severe depreciation and may see substantial foreclosures that will have a potentially severe effect on HOA reserves. Remaining homeowners "may" indeed face assessments or reserve requirements payments due to the fact of shortfalls from higher vacancies….I doubt that a lender pays HOA dues for an empty condo, perhaps I am wrong. It is speculative to mention this but it certainly is not out of the realm of possibility.

SD Realtor

 

I see..

I guess the harder part for me to understand isn't the need to buy. It's about buying twice. wantobuy, I'm not questioning you and your wife's personal "need" to buy. But, it seems like buying something only for 2 years is really asking for trouble. Is there any particular reason why you are only looking in 4S ranch? The reason why I'm asking is because if you and you're wife's goal is to eventually move into a SFH, have you considered Rancho Penesquito? There are plenty of 600kish homes in the 2000sqft+-200.

Some other ones in the Camino del sur area, which are newer.

http://sandiego.houserebate.com/search/homeview.asp?id=1652214&p3=-1&ix=29

http://sandiego.houserebate.com/search/homeview.asp?id=1670350&p3=-1&ix=62

http://sandiego.houserebate.com/search/homeview.asp?id=1647738&p3=-1&ix=64

Probably some wiggle room, as a lot of these homes have been on the market for a long time.

 

[Coronita]

The sad part of this is that I keep reading about several folks in Sacramento, Otay Mesa, Oceanside, Temecula, Riverside, etc that have $4000k+/month mortgages on incomes that are clearly less than this. And this was just the starting payments.

 

[Coronita]

"Again, not saying things aren't going to come down. Or that theres not opportunity ahead. But lets be realistic here. Generally, people that make more/save more can weather storms better."

Yes, unless they lose all their money as a result of being invested in an imploded hedge fund.

….And that would be a fool…..

Plus, my understanding is that to really invest in a hedge fund, you have to be more than just an upper-middle-class income earner. So how many of these folks in the $100-200k salaried folks have access to hedge funds? I would say very few. You would barely make the criteria to even qualify. Of course some of them could have been flippers themselves. Lot's of idiotic possibilities here.

[Coronita]

wantobuy,

I'm confused. You used 0% down and "can afford 4S" in the same post.Do you have a downpayment for both a townhome now and the future home? Let's say you're upside-down on the condo 2 years for now, you might not be able to "upgrade".

Also, did you factor in HOA on a condo, insurance, Mello Ruse(I don't think there is any in RB, but double check) ?

Do you have kids? If not, why must you by a 3-bed unit, and not 2? Just suggesting if you "need" to buy and buy 2 years later, at least try to minimize the purchase now.

 

[Coronita]

The upper 20% of the income earners are still spending, and supporting the rest of the economy. You think if these 20% people get hit, that the remaining 80% will be in any better shape then they are now? I don't. It's going to hit them even harder.

Well, to be fair, saying that the rich will be doing better than the poor in bad times is kind of like saying San Diego is sunny…

Still, point taken.

 

I actually meant this for the comment, quote:

Give Carmel Valley some time. Sooner or later businesses will start leaving San Diego because they cannot attract talent here due to high cost of living. Then all of a sudden someone who was comfy in CV in a 4000 sqft making 200k a year is out of a job looking to move.

 

Implied here is that when most of the 200k people have a forced mass exodus, because businesses will start leaving, you'll be able to step right in and pick up property pennies on the dollar.

I don't disagree that there will be a correction. BUT…Let's be realistic. If there is a mass job loss from your high wage earner across the board, and they can't find work here and have to leave, how will own situation be relative to these folks?

Either

1) You make a lot more than these people.

or

2) You make nearly the same as these folks, didn't lose your job, and haven't already bought, and have saved enough.

or

3) You make much less then these folks, but miraculously didn't lose your job and have saved a lot more than these folks to weather the storm.

#1 folks can take advantage of this situation if it happens, because of the economic pecking order…But, I would say you aren't in category #1 if you are complaining about affordability. You would say things are irrational and ridiculous.

 

#2 folks: Ok. So in this case, I would consider two situations.

2a) If you believe the high-income profession is diversified in SD:Yes, it is possible for a subset of high-wage earning profession to experience job loss. The lose of a group will bring some price pressure, but there would be plenty of other professions still getting paid. I have trouble with the pennies on the dollar theory, because other folks in from other high wage professions which are are arguably in better shape then #3 folks would definitely scope up the bargain before #3 folks. If 3000sqft CV homes were around 400k-500k, I would pick up one, my relatives would probably pick up a couple of vacation homes, and my wife's relatives in china would probably do the same.

2b) If you believe the high-income profession isn't diversified in SD and most get wiped out together. OK. Let's face it, in this case most people who are these high wage earners would have similar professions and/or skill sets. A limited of #2 folks can differentiate yourself from others, but for most of us, we aren't really that much different from our pears. So if your peers are going to find it difficult look for employment here, so will you. This is what I refer to as being mutually screwed.

Personally, I think the demographics in SD are #2a, and not #2b (unlike the bay area). That's why when you saw the dot com explode, you didn't have a massive issue here in SD, while you did in the bay area.

#3 folks: Well anyway, let's assume #2 folks across the board gets wiped out. I'm trying to have a hard time understanding how mass job losses at this scale in the high income earners won't have significant impact in lower income earners. The economy isn't independent. High wage earners lose job and move==> less spending elsewhere here ==> everyone in retail also at least equally affected. Less people paying taxes ==>city/local/gov/teachers/and every other public workers also at least equally screwed.

 

Again, not saying things aren't going to come down. Or that theres not opportunity ahead. But lets be realistic here. Generally, people that make more/save more can weather storms better.

 

[Coronita]

I would say these folks are probably 20% of the population overall. BUT, i would also say it's the 20% that still spending and keeping the rest of folks employed. Is this a concept that's hard to grasp? Take a look at higher end retail like Sak or Tiffany and Co and compare that to lower end retail like Walmart over the past two quarters. Which did well, and which ended up eating sh*t?

 

Speak of the devil: the 20-80 Rule:

 

Merrill Lynch Downgrades Wal-Mart Stores to "Sell" – Reports

 

NEW YORK (AP) — Shares of Wal-Mart Stores Inc. fell after the opening bell Thursday after Merrill Lynch reportedly downgraded the world's largest retailer to "Sell."

The Dow Jones industrial average component was down 87 cents, or 2 percent, to $43.33 in morning trading.

According to multiple media reports, the brokerage cut its rating on the shares from "Neutral," citing concerns that profit margins are eroding at its U.S. stores as the economy slows. A Merrill spokeswoman would not confirm the rating change, and said they do not release their equity research to the media.

When it reported second-quarter results earlier this month, Bentonville, Ark.-based Wal-Mart cut its profit forecast for the full year. And when it released sales figures for July, the retailer posted a slim gain but warned that increased discounting is hurting profit margins.

Sears profit falls on discounts

NEW YORK (MarketWatch) — Sears Holdings Corp.'s second-quarter profit tumbled 40% after increased discounts at both its Sears and Kmart chains ate into profit margins.

Net income for the quarter ended Aug. 4 fell to $176 million, or $1.17 a share, from $294 million, or $1.88 a share, a year earlier. The year-ago profit included a gain of 14 cents a share from the settlement of a lawsuit.

Revenue including merchandise sales and services dropped 4.3% to $12.24 billion, the Hoffman Estates Ill.-based company

The company cut prices and increased other promotions after demand fell across most categories at both its Sears stores in the United States and Kmart locations. Sears, the biggest U.S. retailer of appliances, has unveiled "Ultimate Appliance Promise," a campaign to spur buying of refrigerators and other appliances, where sales have slowed due to the weak housing market.

 

Meanwhile….

 

Tiffany Sparkles With Latest Results

Whether they enjoy the jewelery is unknown, but traders sure do seem to appreciate Tiffany's stock.

Tiffany (nyse: TIF – news – people ) surprised Wall Street on Thursday morning with better-than-expected sales and pleased traders by upping its full-year forecast for sales and earnings.

For the period ended July 31, Tiffany said profits actually slipped 10%, falling to $37 million, or 26 cents per share, versus $41.1 million, or 29 cents per share in the year-ago period.

The company recorded a 17-cent-per-share charge related to the pending sale of its Little Switzerland business.

But sales jumped 19% to $662.6 million. U.S. retail sales, in particular, were up 20% to $345.3 million in the second-quarter. Same-store sales increased 17% in the quarter. Sales in the New York flagship store rose 31%, partly reflecting strong sales to foreign tourists spending money in Gotham.

______

 

See a pattern here? People on tight income (characterized as your typical discount store shopper) are taking a huge hit. Specialty stores that typically cater to the upper income are actually doing well, if not better. 20-80 rule. The upper 20% of the income earners are still spending, and supporting the rest of the economy. You think if these 20% people get hit, that the remaining 80% will be in any better shape then they are now? I don't. It's going to hit them even harder.

 

 

[Coronita]

Another interesting read:

 

4 Pillars of Investing, William J Bernstein (not a financial planning/advisory book, but interesting)

[Coronita]

Give Carmel Valley some time. Sooner or later businesses will start leaving San Diego because they cannot attract talent here due to high cost of living. Then all of a sudden someone who was comfy in CV in a 4000 sqft making 200k a year is out of a job looking to move.

 

Yeah whatever. Techies these days that are making mid-sixes usually don't have to work for a company located here anymore. It's called tele-commuting to the Bay Area. And one thing for sure.. No matter how ridiculous your pay might be here, it's even more ridiculous in the Bay Area, so relatively it's still cheaper to pay someone here than over there. And in case you haven't noticed, Bay Area is picking up significantly again. I've worked with a few companies down here, that are all HQ'd in the bay area. Salaries are comparable to the Bay Area, because of the entire salary equalization thing.

 

But guess what? If there is a mass exodus that happens to these folks, I think most everyone else will be hit too. Why do people keep thinking that those that make the mid-six figures losing there job and move out will be affected ,while others for which are dependent on those people (retailers,support,etc) won't???

 

I would say these folks are probably 20% of the population overall. BUT, i would also say it's the 20% that still spending and keeping the rest of folks employed. Is this a concept that's hard to grasp? Take a look at higher end retail like Sak or Tiffany and Co and compare that to lower end retail like Walmart over the past two quarters. Which did well, and which ended up eating sh*t?

 

[Coronita]

Yes, their credit deserves to dive and they cant live in a house they cannot afford. But dont validate the Scammers logic. They feel justified also. Their defense is that the investors just dont like that the market has turned.

Think again. This company fraudulently inflated Values with fraudulent Appraisals! the people didnt know that!

 

Real estater,

I don't doubt that fraud did happen. And I don't think that anyone here would disagree that fraud did play a role. But, it does take two to tango. I find it difficult to understand how anyone could have participated without somehow thinking this wouldn't be fishy. I would say to some extent, several ended up "victims" at least should be partly responsible, as they probably were lured their  from greed and the appeal of quick money. It unfortunate that some folks exploited religion to con people, but that does happen quite often.

 

[Author]

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