[jennyo]

Local property tax revenue surpluses have largely been used to hire more public safety employees and to increase the salaries/benefits of those employees over the past few years, to probably unsustainable levels. San Diego is the poster child for this. Local public safety agencies statewide have been playing leapfrog with salaries and benefits for police and fire for several years. Most safety employees can retire at 50 with 3 percent of their highest salary for every year worked, plus lifetime medical benefits. Many of these employees get disability retirements due to the strenuous nature of their jobs and therefore only have to pay income tax on 50 percent of their pension income.

The state gets very little property tax, its revenues come from the “big 3”–the personal income tax, the sales tax, and corporation tax. That (among other reasons) is why the state continued to face structural deficits even when real estate was booming from 2001-2005. Income tax revenues are very volatile. The locals have been riding a gravy train since 2001 and are going to start howling soon because the revenue growth has come to a halt. The smart ones, that spent the funds on one-time purposes like infrastructure improvements or set aside rainy-day funds will be fine. But those that expanded safety employee benefits are in for some hard times, with few options for cutting costs. Trying to reduce or eliminate pension benefits from public safety “heroes” is political suicide.

[jennyo]

For the record, if I were desperately selling my spa because I needed money, I would sell for whatever offer I got, not $2000 or anything close. Also, mine is terribly clean, has been used maybe 10 times in 3 years, no children, peepee, or anything else untoward. Maybe I should sell it… but I am not in toxic loan debt crisis…

If you really want a hot tub, you can do what my friend Craig did: Buy one off E-bay for $80, spend $300 renting a truck to haul it from Corvallis, Oregon to Truckee, and wire it yourself (since you are an electrician)…

[jennyo]

We have one of these we bought new for about $3500 at a spa show 3 years ago (in 2004). So the guy should be discounting it more than $300. If I was getting rid of mine, $2000 would probably be acceptable, maybe even less if I really wanted it gone.

Plus it will cost you about $400 to get an electrician to wire it up at your house unless you already have a spot for it that is prewired.

[jennyo]

Update: The POS closed/recorded today, about a week early. The buyer got a 95 percent loan, so those are still out there, but this was not a jumbo. We are very relieved to be done with it, I really think if this had fallen through we would have been stuck with the place indefinitely. Our realtor told us that for the last couple of days it appeared that there was a squatter spending nights in the house. The squatter didn’t do any physical damage (that would be difficult since the house is so disgusting in the first place), but apparently he would sleep there, brush his teeth, and leave his underwear on the floor….not our problem anymore. Phew.

[jennyo]

State government jobs are also very secure. Government jobs being cut does not necessarily equate to government employees losing their jobs. The state has a terrible time getting employees to fill the thousands of vacancies that exist every day. Even during the 2001 budget crisis when everyone got “surplused,” only one or two people in the entire state got laid off and that is because they refused to bump back into a demotion.

[jennyo]

Reporters that work for alternative newsweeklies like the Reader do not make enough money to purchase a car, much less a home. I know, I was one. Which is why the reporter appears to side with the “victims” who did not read their loan documents or do any research prior to entering into those contracts. Many people that become “reporters” have problems understanding math and financial issues, so it’s no surprise that the reporting is shoddy, ill-researched, and simply doesn’t make sense. You can’t expect someone who makes $10/hour plus a free gym membership to actually get the facts straight.

I am about as liberal as you can be and this story completely disgusts me. What is so difficult about reading that stack of loan documents before you sign them?

[jennyo]

We are doing a 3 percent cash rebate on the sale of an inherited home that needs a great deal of work. The buyer asked for it in his original offer and we countered with a higher sale price and an agreement to provide the rebate, which the buyer accepted. Not sure if it is typical or prevalent in this market, though. The only thing that appears prevalent in this market is seller desperation, which would certainly lead to concessions like cash rebates.

[jennyo]

I do agree with you bsrsharma, I was just making the point that other sellers may not be as quick to take a low offer because they have a mortgage. The house has been on the market 6 weeks, so we could wait to see if something better comes along. It might not. I just don’t care as much about the potential of a higher offer as much as I care about getting rid of the place quickly. You are right, no one knows that the house has no mortgage (it is not technically an estate sale because the property was transferred through a trust), they just see a POS and make lowball offers.

[jennyo]

I do agree with you bsrsharma, I was just making the point that other sellers may not be as quick to take a low offer because they have a mortgage. The house has been on the market 6 weeks, so we could wait to see if something better comes along. It might not. I just don’t care as much about the potential of a higher offer as much as I care about getting rid of the place quickly. You are right, no one knows that the house has no mortgage (it is not technically an estate sale because the property was transferred through a trust), they just see a POS and make lowball offers.

[jennyo]

I do agree with you bsrsharma, I was just making the point that other sellers may not be as quick to take a low offer because they have a mortgage. The house has been on the market 6 weeks, so we could wait to see if something better comes along. It might not. I just don’t care as much about the potential of a higher offer as much as I care about getting rid of the place quickly. You are right, no one knows that the house has no mortgage (it is not technically an estate sale because the property was transferred through a trust), they just see a POS and make lowball offers.

[jennyo]

I don’t understand how all these people thought that they could “afford” $500K-plus homes on such low salaries. I was absolutely terrified when I bought a $115K home in 2000 on a $50K annual salary. My payment (including impound) was like $950, a $300 increase over the rent I was paying at the time(in Sacramento things used to be cheap). Even now, with an annual income four times what I was making then, I would not take on that kind of mortgage unless the house was on several acres of land or riverfront.

[jennyo]

I don’t understand how all these people thought that they could “afford” $500K-plus homes on such low salaries. I was absolutely terrified when I bought a $115K home in 2000 on a $50K annual salary. My payment (including impound) was like $950, a $300 increase over the rent I was paying at the time(in Sacramento things used to be cheap). Even now, with an annual income four times what I was making then, I would not take on that kind of mortgage unless the house was on several acres of land or riverfront.

[jennyo]

I don’t understand how all these people thought that they could “afford” $500K-plus homes on such low salaries. I was absolutely terrified when I bought a $115K home in 2000 on a $50K annual salary. My payment (including impound) was like $950, a $300 increase over the rent I was paying at the time(in Sacramento things used to be cheap). Even now, with an annual income four times what I was making then, I would not take on that kind of mortgage unless the house was on several acres of land or riverfront.

[jennyo]

bsrsharma, the only caveat to using this as an example is that, as sellers, we are in a much different position than many others selling homes in this market. It is an inherited house, with no mortgage, so we can go pretty low since anything we get out of it is gravy.

[jennyo]

bsrsharma, the only caveat to using this as an example is that, as sellers, we are in a much different position than many others selling homes in this market. It is an inherited house, with no mortgage, so we can go pretty low since anything we get out of it is gravy.

[Author]

Posts