[temeculaguy]

That’s fine, if it is going to be the next catch phrase to sweep the nation (old school letterman reference) then it has taken it’s first step. We will get there, one blogger at a time. Truth be told I probably liberated it from someone else, I just can’t remember because I regularly drink and type.

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My Bad, I should have figured it out based on three models per tract, I thought those were the starting prices per plan. In my defense that concept is so silly I couldn’t have figured that out on my own, that’s like buying futures. Quick, strike the price now before it goes up. Let’s see, verge of the worst market collapse in history and in the worst place of the hardest hit region, ooh sign me up. I hope they buy you dinner and flowers before they &^%$ you.

You know what I think, they are preparing to fold the tract. In the early nineties a bunch of developers shut down their tracts half built, packed up and left. They had obligations to build improvements like parks and common areas that they hadn’t done. In Temecula, the city seized the models, auctioned off the furniture and then auctioned off the houses, then with the proceeds they built the things that were promised in the development plan so as to not burden the taxpayers or leave the vacant lot the builder was supposed to make into a park or whatever the deal was. They also did this to keep HOA’s from eating it on 1/3 built defunct tracts and banked the proceeds so the HOA could survive and pay for the pool untl the market turned and a fill in development could finish it out. Seems to me the builders are setting up a possible exit, like someone preparing for bankruptcy or has a big IRS lein leases their car so it won’t be seized as an asset. If there is one place where will see the first tent folding by the builders it is in French Valley. Something stinks in Denmark.

Who remembers the Temeku hills golf course, they built a brand new gold course and had about a thousand unbuilt lots, then just let the grass die and fenced the whole thing for about 4 years, boy was that a peach to look at. On the plus side, the kids on their BMX bikes think they died and went to heaven.

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Well I’ve probably disagreed with everyone at one point but I will agree with nostra on this one, last down cycle I had some great work done buy some of the best guys in the business at great prices, they just wanted to keep their employees working. I had master craftsmen working for illegal alien wages and I didn’t drive a bargain, that was their first quote. A few years later in the boom I called them for something else and the waiting list was months long and the prices had doubled.

[temeculaguy]

I don’t understand the rent back for 1 year thing, does lennar want to be the landlord? A managment company want’s you to be the landlord? What are the specifics.

As far as them being a good buy, if you wanted to live there and you worked in town I guess they would be. The biggest problem is the location, I’m not sure if it is in the City of Murrieta, they annexed some land but check the school district too, it may be in the Menifee district because these are way out there, that hits the value if it isn’t in Murrieta’s school district. Yahoo maps doesn’t show the streets they list in the directions yet but it’s right on the border, everything North of Los Alamos is not in Murrieta but may still have a Murrieta zip code, you lose 5-10% value for being unincorporated and another 10% if you are out of the school district. As a rental I don’t think it would pencil out, the 390k one won’t command 2k in rent (they might tell you it will but it won’t), I’m sure the larger ones get a worse ratio so just analyze the cheapest. French Valley is the newest part of the Temecula Valley and has the most foreclosures (usually in the top 25 of the country). The biggest drawback with those is the location. They require the use of the 215 or winchester road for many miles, which is a nightmare because of all the houses out there. I can literally get to Escondido from South Temecula faster than I can get to French Valley during commuting hours. For people who work South of here, that is the least desirable place and can double their drive time from the North County. I have a friend who works in Vista who moved out there from temecula and complains that he doubled his commute time, the roads just haven’t caught up and with the slowdown in R/E they may be delayed further, if it’s unicorporated, forget about it. I wish all of the negatives weren’t true because when I was looking for a rental there were great deals and tons for rent out there and lots of repos, I just don’t want to live there and will pay more to live further South, I imagine other renters and buyers feel the same way. I would also be very wary of investing in Murrieta with any company that wants to handle your investment property and shows you how you can make money (I hope you didn’t hear about this in church), there are few hundred investors still licking their wounds from a similar investment scanario.

Lastly I think the whole valley is a bad investment for a landlord if you need to count on 2k or more in rent. At that price, renters can just buy their own and I see the rental stock in the 1500 range as being tight with hundreds of choices at the 2k price. Rents decrease as you move North and East and inventory rises, these houses are in the North East.

[temeculaguy]

Someone else used the phrase “pain train,” that is sweet, I thought I made that up, maybe it is a more widely used term than I thought. Sorry this wen’t sideways into a divorce thread, there is just some merit to the reality that prices cannot stay at a level where even a single person earning twice the median is priced out. There are also many couples where one person does not work or earns very little. The amount of high income dual earner couples is not enough to keep the whole market propped up. We got in this mess because 60%+ of the population wants a house but half of those people needed wacky financing to do it. Remove the wacky financing and you have removed those buyers, Less buyers (less demand) and you have falling prices. It is a fixed asset that cannot be reduced, reducing inventory by builders only shifts the inventory to the existing stock. No matter what any realtor or economist tells you, supply and demand is a law, not a guideline, and that law is never violated for very long

[temeculaguy]

because it is easy to guess at something father away and not have to own up to being wrong. Another reason is the industry leaders (KB homes CEO, Fannie and Freddie’s CEO’s) just came out and said 2008 will be crappy too. That puts 2009 as the earliest recovery according to industry people, add a year or two and that is propbably where they think the truth is, voila 2011. Personally I think there isn’t a time frame that is required to hit bottom, it’s fundamentals, if the market crashes 25-55% next month, recovery will start by Christmas. The problem is that history has shown housing moves downward slowly and the powers that be are doing everything they can to put the brakes on the slide. I think they should just face the inevitable and let it crash then Home Depot, Realtors, Mort companies, et al, can get back to making money and keep the economy moving, this slow death has a lot of negative side effects with the application of the brakes (dollar losing value) being the worst of them.

[temeculaguy]

Kev, the mere fact that dual incomes are needed to buy is exactly why the prices will fall, affordability. Half the population is single and removing them from the market takes a huge chunk out of the demand. I have a theory that if housing plummets 50% the divorce rate will skyrocket. I base this on a straw poll of buddies who stay in marriages primarily because they can’t afford housing as a single person and it scares them into staying.

I think you will see that house 3/2 1500 sq return to 300k, maybe not 200k. A single person making 100k can easily afford a 2k/mo payment and borrowing 240k gets them in the ballpark with 20% down on 300k. I see that as when the affordability returns to the market, unless of course none of them have saved a downpayment.

[temeculaguy]

In defense of Bugs, Roubini is similar to Shiller, both are professors and free to be bears while Economists working in the private sector are hamstrung by the things Bugs mentioned. In fact Shiller was more free when he wrote Irrational Exuberance, now that he has a publicly traded housing index, he has had to edit himself. Roubini has nothing to hold him back right now, that’s why he is one of the few economists that can speak his mind. Bugs’ post mentioned how greenspan was attacked for quoting Shiller seven years ago, today, Bernanke would be attacked if he quoted Roubini, but that doesn’t mean he doesn’t agree with him. Economists working outside of academia have to get paid somehow, so if they don’t write books, they need to be wary of who is paying the bills when giving an opinion in public. The UCLA professors are usually bullish but their department is heavily endowed by the building industry ( I could be wrong but I think Lusk, a builder, is who the school of economics and housing is named after). On a side note, how cool would it be to be in either Roubini or Shiller’s economics class, in my next life I am going to college in the 30’s, even if I had them as professors I’m sure I would have acted just as I did in college, just looking to get the answers for the tests, studying the high points but failing to comprehend what they were actually teaching, thinking only of the next fraternity party and staring at the hot chick in class, damn I wasted my youth.

[temeculaguy]

Cashman, you’ve come this far so you might as well wait six months. Over the next six months the fallout from the mortgage crisis, arm resets and market psychology will have an impact. We are in two totally different markets so they can’t be compared but six months ago I was feeling your frustrations and the last six months have throttled my local market. The next six months will add in the mortgage crisis fallout, elimination of subprime and 0 down, arm resets, etc. Those upcoming issues are not reserved for particular areas but will have an effect on all zip codes as will the media coverage. I literally stood in a sales office, checkbook in hand no more than four weeks ago. I came here looking for support and chose to hold off and extend my lease six months. In those four weeks, the house I would have bought has gone down 10% and still hasn’t sold with many more coming online. For a year, nothing was happening as I though it would, now it feels like the place is on fire. Hang in there just a few more months before throwing in the towel, start tracking areas 10-15 miles away for sign of what is on your horizon.

[temeculaguy]

Wow, don’t know what to make of that social commentary bob. Just to clarify for those scoring at home, #3 was a joke, right?

I’m with you on prohibitive cost of housing is affecting young families or families to be, that’s the primary reason it will return to normal. I do disagree that yuppies postpone marriage because of housing costs, being married cuts your housing cost by 50%, I think that people have postponed divorce because of the high cost of housing. I know I did and I know housing a single person in a house half the size is not half the cost, it’s closer to 75% of the cost.

Yuppies are postponing marriage because they want to and they should, marrying young isn’t all it’s cracked up to be.

Back to #3, do you honestly believe that the third component in the decline of western civilization will be the media’s tolerance of alternative lifestyles. I am a straight guy and a parent yet I have no fear that watching Will and Grace or Ellen on T.V. will make my kids gay. Rosie Odonnel might make you puke but it won’t make you gay. I am no expert but I have read a few books and I think the whole gay thing can’t be blamed on the media, scientists believe it has something to do with people being attracted to other people of the same sex, however I could be wrong and until I confirm it we all may want to stay away from the media.

[temeculaguy]

Today’s update, 21 homes under 400k in 92592 with a three car garage. 4 of them for 350k

[temeculaguy]

While it pains me to say it, he was the only one I read that called the meltdown at Standard Pacific, saying that was the one builder he wouldn’t loan money for a cup of coffee to. This was about two months ago and other writers were listing them as one of the builders that would be fine. They went from the 20’s to 5 in the time since he said that. I don’t like Cramer for a couple of reasons but his advice on the builder stocks in the last few months has been more accurate than any of the prognosticators.

[temeculaguy]

I think Riverside County is worse/faster than I expected and S.D. is slower than I expected. Temecula/Murrieta/Etc is 25% accross the board decline and falling. S.D. seems much more sticky. With the sweeping changes in financing I would have expected more from S.D. since most are priced well into the jumbo range and it was the creative financing/arm/neg am capitol of the world in 04/05. How that house of cards is still standing is beyond me. I guess everyone does wan’t to live there and R/E never goes down on the coast or chowderhead’s Jedi mind tricks are working.

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Until now I have avoided the political arguments because they have a only a slight influence on R/E and interest rates, with presidential politics having even less influence. I don’t know the age of the posters who are reagan bashing but if you weren’t at least driving a car during his first presidency or practicing nuclear attack drills in school, you are in no position to judge the man or the time he ran the country. I was there and he did all that you can ask and more than we usually get, he left it better than he found it. He won the cold war without a real war, the attitude and pride was entirely different and things were generally good under his watch. Another hundred years, he and Kennedy will be considered as the top leaders of that century. I won’t argue the details because it is as fruitful as arguing Jim Brown/Ladinan Tomlinson/Emmet Smith, they played in different eras, so you really can’t ever find the answer without a time machine.

Was Reagan the entire reason the country turned into the superpower it became, not entirely, but he helped. The 1980 Olympic Hockey Team is who I give much of the credit to, but i look at the world differently than most. What I don’t look at differently is what life was like from 80-88 and how I voted in 1984 (I am not a lock step republican or democrat, I am not religious, I actually voted for clinton and think he did a good job in many respects getting my vote for second place in my lifetime and I didn’t vote for our current president). In 1984 Reagan won every state but Minnesota and D.C., for those who lived then, it was a no brainer. Even Lewis Black, a somewhat liberal comedian, has said that we should dig up Reagan from his grave, stand him up at the podium and even saying nothing and dead he could probably do a better job than the current president and those we have to choose from to replace him.

I’m sure you can whine about some thing he did that was bad while sipping coffee in your favorite coffee house. Fine, have at it, but rest assured you won’t convince me. I was there and from Jimmy Carter to today, he’s still the best in my lifetime. Sometimes a feel good president is all you need when nobody feels good, the world punks you all the time, the economy is in the crapper, interest rates are 17% and you can’t get gas on even numbered days. Those are the cards he was dealt and the was a crappier hand than even the next guy will get, leave it better than you found it, that’s all I ask.

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You can probably buy one of the models furnished at a bankruptcy auction pretty soon, Standard Pacific will be lucky to stay in business for much longer. Their stock hit a new low today of 6.12 (it was worth 5x that at one point this year and was worth 3x for most of the year). They have serious money problems and are having trouble borrowing. Their tracts, no matter where, are subject to ending up being half built and having “fill in” later (much later) by another developer. If there is an association and it’s not in the final third of build out I would be a little wary.

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