[powayseller]

Thanks for the well wishes. In my husband’s case, the war in Iraq strained the military budget from its other projects, so they were cutting back. There are also lots of competitors, and when you spend 6 months of payroll vying for a 10 year contract and end up not getting it, eventually it cuts into your profits. I was expecting to take a hit from the recession, but didn’t think it would happen so soon.

The reason I would not buy a house now is that our unemployment rate is certain to double. So while no job is ever secure, the insecurity right now is heightened. Anybody working in any way on projects related to consumer spending (making chips, software, TVs, etc.) should consider their job on the line. The highest security now is in health care and government jobs. But even government jobs will be cut drastically when property tax and sales tax and income tax revenue drops during the recession. Teachers, firefighters, police officers, clerks the county office, are not exempt. In short, this is the time to save extra hard, not take on new spending.

an, I hope your job is safe, but what if it isn’t? Couldn’t you survive a lay-off better as a renter than as a homeowner? Only you can decide if this is a risk you are willing to take.

[powayseller]

That’s right. One of the jobs lost might be yours. It’s foolish to buy a house now, not knowing if our job is secure. Even governments lay off. My husband, whose company did work mainly for the Navy, was laid off from his job last week. Thankfully, he is excited about other prospects, but we are facing an uncertain time right now. Those who are not yet laid off: how do you know that you won’t be?

[powayseller]

We hatched 3 eggs, and we are renting. Nestingcouple, we sold our house in Jan 06 and are renting out the downturn. I have 1 in elementary school, and 2 in high school. Our family loves renting, although our rental is not nearly as nice as the home we sold. I, a woman, value the financial security over home ownership. Possibly because I have owned several homes, I don’t have that “gotta have a house” itch anymore.

To your costs, add $500/month for Home Depot and remodeling costs. Don’t let anyone tell you it’s only $100. All you need is one broken pipe or leaking roof to blow through $10K – $15K. My neighbor had a bust pipe that her insurance didn’t cover (flood) so they had a hug expense in replacing all downstairs flooring and furniture.

All all the “I want…” items: furniture and draperies to fill the space, matching towels/sheets (who cares in a rental, but when it’s your own house, you want it to be perfect), landscaping, upgrading for energy conservation (replacing windows). If I owned this rental, I would already have spent a ton, replacing the old windows, the carpet, painting, new countertops, better flooring and baseboards, better landscaping. The truth is, as a homeowners, you spend a ton of money making everything nicer. So it’s not just the repairs and maintenance, it’s the improvements, and it is constant. Our biggest savings in renting is eliminating all those home improvements.

My suggestion is to get a rental you really like, and invest a couple grand in painting it, or adding some landscaping, and make it nice. It’s a lot lot cheaper to sink a tiny bit into a rental than to lose several hundred thousand grand on a place you own. We bought a lot of potted plants, including several trees and ivy plants, that we will take with us when we move. I consulted with a tenant attorney before I signed my 2 year lease.

I love ocrenter’s suggestion to use that same money to buy one house plus several rentals. If you don’t mind living in a duplex, you can live on one side and let your tenant on the other side pay the entire mortgage.

To your rent-buy calculator, add a 5-10% annual decline in nominal house prices. Personally, I expect a 30-50% nominal decline before this is all over, and I believe that we will not be back to today’s prices in my lifetime.

[powayseller]

Oil is being sold in euros and other currencies soon. So we dont’ need dollars to buy oil. You can buy oil with euros.

But I do agree that the US will inflate its way out of its obligations. So it’s a really good theory!

[powayseller]

RenterClint, if wages keep growing as slowly as in the past, unemployment rises as construction/realtor/lender professionals are laid off, and the exodus out of San Diego continues (reducing potential buyers), foreclosures/bankruptcies/tax liens keep rising, then prices have to drop 30-50%. I think you will *love* my forecast on my website. I’m sorry, I do not remember the NCTimes comment you’re referring to.

[powayseller]

Nice post – thanks.

[powayseller]

Wow! Good find, Perry. I also happened to see this in the front page of today’s U-T, and am glad you posted this first. Now every U-T reader who opens to the Business section will see “1 in 5 Subprime Loans in Trouble”.

Too bad the title was not more accurately “1 in 3 Subprime Borrowers in Trouble”. If I had written the story, I would have titled it “1 in 3 Subprime Borrowers in Trouble”.

Who cares what happens to a specific loan? We care about the fate of the borrower, the fate of the house.

Let me explain, per page 19 of the report.

The 20% foreclosure rate is for one specific subprime loan, not for one specific homeowner. Because 60% of subprime borrowers homeowners refinance their way out of the problem into another subprime loan, “1/3 of all families who obtained a subprime loan in 2005/2006 will ultimately lose their homes”(p. 19)

Borrowers who repeatedly refinance into a subprime loan increase their possibility of foreclosure, so that by the 4th loan, their foreclosure possibility is 36%.

The report found that subprime borrowers in trouble used to refinance their way out of the problem. Large numbers of subprime borrowers have been leaving their mortgages under duress in recent years. Even though they were behind on their mortgage, rising home price appreciation allowed them to refinance. Now that home prices have stopped rising, they cannot refinance while delinquent.

Half of all subprime borrowers are delinquent at least once during the first 5 years. That is an amazing number. In the past, these borrowers could work their way out of the problem by either refinancing or selling. Their inability to do either is what’s causing the concern.

The most startling figure then is that half of all subprime borrowers are delinquent at least once. What will be their prognosis in an era of declining home values, rising interest rates, and rising unemployment? A strong housing market covered up the distressed mortgages, but did not prevent them from occuring.

The study only considered loans with first liens made for owner occupied property. How many more borrowers who got flipper and investment and vacation homes and rentals, are we going to add to this list?

“The housing market downturn is in full swing”, chief economist from Moody’s.com (p. 20)

The report concludes with some options. I found it interesting that the lenders are not willing so far to help the borrower in trouble. “As one Wall Street professional put it, ‘The general feeling among investors is that they are not willing to trade…income for increased servicing costs’.” (p 33) So investors do not want to spend the extra time or money it takes to work with a borrower in trouble.

I wish I could ask them “would you rather restructure the loan for this guy or lose $50K or $200K of your investment by having to sell it at auction?”

So I don’t understand why the investor would rather foreclose than restructure.

[powayseller]

jg, could you stop with the passive agressive behavior? Correcting my spelling, i.e. one typo in the thousands of words I write? Taunting me for not updating a blog that my son wrote for fun this summer? What is your point? If you have a problem with my comments, address them directly. Are you still mad that I corrected your understanding of “reserves on ice”? I was corrected by my brother to include repurchase agreements to our discussion, in which case the flow of money is even greater (although my points still holds true). Or are you mad that I disagree with you on the median? Why do you try to belittle people that disagree with you?

The median lags because prices are falling more than the median shows. Prices on each home have fallen more than 5%. Anyone who thinks the median is accurate would have to believe that most homes in San Diego have fallen 5% off their peak. I just haven’t seen the data to support that. As the realtors here write, we are back to 2003/2004 prices.

How is the Case-Shiller index calculated anyway? If they take same-house sales, would they take a May 2000 sale at $350K, and then look at the most recent sale in October 2006 at $600K, and figure that house gained in price? How do they figure out the peak, and subtract the price of the October 2006 house from the actual peak?

Those wondering about my website: I’m forming an S Corporation, under advice of my attorney and CPA to be effective after January 1, to avoid the $800 annual fee for 2006. The website has a forum, and a premium content area (paypal payment). It is a .com address, so not a blog. It’s a southern California housing forecast, and the entire forecast will be in the premium section. Also covered will be insider interviews, some interesting new stories on the new fraud going on out there, and much more. I don’t want to keep advertising my site here, so I respectfully request that posters refrain from asking me about it. This is Rich’s site. When I am ready, I will make one thread and announce it to all.

[powayseller]

SD Realtor, it seemed like a logical step to me too, but it’s a money loser for the investors. When I mentioned this restructuring possibility to a broker, he said the investors would not be willing to take a lower interest rate. The ARMs have a lower rate initially, but there was a price for that, via high prepay penalty and the loan’s interest rate moving with the market. So why would the MBS holder give someone a loan at below market rates? That is the question. A guy’s loan resets at today’s 6% rate (or whatever it is), and now the bank is supposed to let him rewrite it at 2% or 3% or whatever the teaser rate was, which is the rate he needs to keep affording the payment. So the investor is basically giving the guy a 50% reduction in interest, and halving his income. I don’t know if that is really in their best interest.

[powayseller]

Bill Manning is calling for a complete investigation, and the quote I put in above, is from his editorial on his online magazine.

Some of you wish to libel and slander me for being curious. I ask how small low temp fires could melt steel, and suddenly I believe in aliens and hate Jews?

Please respond to this thread only if you are able to stay on topic. If you are angry about this thread and have to resort to slandering a person for asking questions about the laws of physics, maybe you can’t handle the content and should stop reading, and put this entire thing out of your mind.

[powayseller]

The median price of SFR/condos/new homes (weighted median) lags the actual price decline of those homes by 18 months.

When I say median price, I am referring to all homes. If I mean only SFR, I would say “median price of a SFR”.

I gave an update on my website in another thread last week. I’m sure you read it. Here’s another example of someone pretending to be a great religious man, but being passive agressive and trying to belittle me. (9/11 is off-topic, let’s leave it there)

[powayseller]

PD, I would be more interested in a scientific approach to the shortcomings in the offical story than in your ramblings about aliens planting bombs.

[powayseller]

Have you ever seen a pancake collapse? Look at photos of earthquake buildings, where the floors are pancaked; it looks like a stack of pancakes.

A pancake collapse would take 90 seconds for the WTC.

William Rodriguez, a 20 year maintenance worker at the WTC and the last person to enter the building alive, felt a huge explosion under his feet (between floors in the sub=basement, B2 and B3), in the basement, before the plane crashed 95 floors above. The floors cracked and the false ceiling collapsed. A coworker ran into his office, with skin damage, yelling “explosion!”

Construction workers Phillip Morelli in North Tower sub=basement4, felt the explosion in the basement, which threw him to the floor. Some people in the basement were killed, got broken legs, from the damage done in the basement. He then ran underground to the South Tower and felt the same explosions again.

Firefighters talked of explosions all over the building, and they were likened more to the sound of bombs.

Watch the video, the eyewitnesses are intriguing.

[powayseller]

Have you ever seen a pancake collapse? Look at photos of earthquake buildings, where the floors are pancaked; it looks like a stack of pancakes.

A pancake collapse would take 90 seconds for the WTC.

[powayseller]

This video was made by a Republican, who set out to prove that the offical version of 9/11 is correct, and that the demolition theory is wrong.

His research led to one conclusion: the offical story is a lie.

Anyone who seriously wants to say the offical story is true, should first take the time to watch this video. Without hearing both sides, how can you possibly know the truth? Just saying “it could never be a planned demolition because I don’t want to believe it to be so” is just burying our heads in the sand. It’s like saying the housing bubble doesn’t exist.

Seriously, those of you who say the government version is correct, reminds me of the anger?? thread, where people get mad when you say their house will go down in value. They don’t want to consider the other side. PD’s most recent posts are interesting science fiction, but don’t contain any serious substance to address the problems with heat, pancaking, seismographs, center support columns, explosions, lack of fuel, impacts, physics, and eyewitness accounts.

I was open minded enough to consider this. Why don’t you?

[Author]

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