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Amen to that brother. Another thing about door to door anything, just answer the door naked, they rarely come back and if they do it makes for an interesting conversation.

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OK Bugs, Pain Train it is. Allan, you are dead on with your analysis, my apologies for hijacking another thread with football.

Bugs, I am glad that you also noticed that certain banks are dumping while others are not, I thought I was taking crazy pills because I can almost see a pricing trend based on the bank. I have been trying to figure it out. One bank lists all of it’s stuff with one real estate company and everything is listed at what they repo’d it back for. Another has everything listed within a few thousand of it’s zestimate. Then I’ll see all of the heavy discounts all come from a single realtor and they are all from the same bank. I don’t know if it’s bad analysis of the market by the bank or the particular realtors are giving the banks different info. I have to think that a bank in Europe has to rely on whoever they have representing them locally. I saw a house in the MLS and the tag line said “priced lower than the repos,” and they were. Of course I took it upon myself to e-mail the repo’s realtor and ask them why a dialed in model match is cheaper than their brown lawner, funny, they never responded and then two days later they dropped their price 10k but are still 40k over the resales and a 100k over new from the builder. So much for “must sell” inventory.

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If the Pain Train theory has any legs, this will be the first of many but this one and the others that go big and go early will actually sell quickly. In six months there will be 20 of them languishing at 25% off. This is merely the recon unit for the pain train, train is a coming, but this isn’t it,…. yet. Scrips and other desirable areas will benefit from the pounding the banks have gotten in the I.E. and central cali in the last year. Waiting hawk will probably agree, last year many of the repos up here were priced higher than the resale and new stuff, it took them a while to figure it out an only now am I seeing them lead the downward trend. As the repos hit you, the bank’s REO guys have already learned some lessons, they will have their first 15 plays scripted when your game starts. Play #1, cut the market off at the knees, go 25% off and grab the bargain hunting pent up demand, if there’s one sale in that zip code, be it. Play #2, see play #1. Lather, rinse, repeat until you run out of sideliners at 25% or another repo goes 30%, then adjust accordingly. I swear I could totally unscrew any bank’s REO division in 5 days and get them a 10% stock bump and I am a complete idiot, then again I could probably lead the Chargers to more wins than Norv. If he blows the packer game I am calling A.J. and I am offering $100 to the Bill Cowher fund, SI’s Peter King thinks it will cost 8 million to get Cowher to coach again, I may be in for $200 if they lose by more than a field goal.

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Tell your professor you want to change the topic to specific case studies of specific but randomly selected streets in different areas of the county, get the info from the county recorders office (free in person, 1600 pacific coast highway, 1st floor, last time I visited). Just do one street at random, then another in a different town but stay within the county so you can get it in person.

The census data is crap, asking the association of realtors is like asking the pope how many child molesting priests are in the church. You need to pay any of the data outfits and they won’t have what you are looking for, do a news search and see if some reporter already wrote something similar. Yahoo neigborhoods will do it by zip code, not sure if it goes back far enough and where that data comes from is suspect. As far as average mortgage payment, I don’t think that data is harvested, in person title search of each house will give you a peek at some of the loan docs and you can see the helocs. With all the 80/20’s out there and helocs, you need to look under the covers to get the real story.

Average sales price is another lie, incentives aren’t reflected and they can be 20% today but were non existent in 2003. I am not trying to criticize your project but if you were an author and gave me the numbers you are looking for in an article I would dismiss it and could make you crawl into a fetal position on the floor in a debate if you used those numbers and cited those sources. This is akin to telling me the average weight of a Californian based on info culled from driver’s licenses, bad questions and self reported information will only give a reader and an analyst an incorrect view. The packers have a better record than the chargers but the chargers are favored on the road, why? because an in depth analysis of the variables sheds light on the truth. If your project is to get a master’s degree, nut up and go get the real story. If you are doing an article for your high school paper, just say that fraudulent lenders screwed the uninformed and interview a family facing foreclosure, no strike that, the San Diego Union already does that.

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I have no problems with door knocker realtors, it’s old fasioned but it’s good for them to meet real people and learn more about the neighborhood. Even if they don’t get any business it gives them a little more insight to the intangibles before selling someone a home there. This R/E shakeout is needed in that industry, two thirds of them that jumped in during the last five years know less about it than I do. Plus about half of my buddies wives have become realtors and I need them to all get out of the business before I need the services of a realtor so I don’t lose any friends over the fact that I’m not going to use any of them. The last time I made up an excuse and said it was in the divorce papers that my ex wife got to pick the listing agent, then based on the appearance of that friend’s wife (big boobs, younger, thin, whichever applied) claimed that my ex hates his wife because of that feature because women are like that. They bought it last time but if any of these bubble head trophy wives stay in the industry I’m going to have to come up with something else or fake a new divorce and photo shop some vegas wedding pictures, maybe I’ll claim it was forclosed on and the bank picked the agent. Maybe Amway will make a comeback and they will forget all about real estate. If not I’m going to end up golfing alone.

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Actually it is not so much a validation of one city over anohter but the logical trend of not placing employment downtown. Big companies have gone the “campus” route and many other companies that have multiple locations don’t put their offices downtown if the don’t need to. Technology has eliminated the bicycle courier and the need to be a few blocks from suppliers, banks, etc.

Many employers that do not need a particular retail location choose a place based on land price, housing, parking and employee satisfaction (which means not downtown or anywhere near it).

My employer has a number of offices and in two decades I had to work at the downtown location for one year, it was like drawing the short straw. Everyone hates it, parking and traffic sucks and everybody is trying to get out. The nightlife doesn’t matter because you still have to drive home so you didn’t want to drink much. I did like jogging at lunch, downtown has more than it’s share of eye candy but I can see why employers choose other locations and will continue to avoid downtown areas. Industry needs more space, financial services can use technology to overcome geography and R&D needs happy people. I see more and more trending away from downtown in S.D. and other cities. Petco park wasn’t open during my stint, that may have changed my opinion and would lessen the blow if I had to go back. Why is Chicago and N.Y. different, because you can get drunk after work, party like a rock star and take the subway or a cab home, that’s employee satisfaction.

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Thanks, now I won’t be able to sleep. When crazy people say these things I can laugh it off. Peter Schiff is pretty accurate but he acts like a nut so he doesn’t get me too worried (but i do listen). The expert being interviewed in that article has the credentials and the demeanor that I can’t place him in the nut column, so I am going with the three glasses of wine to fall asleep plan. i am totally prepared, in a better position for his prediction than anyone i know in person, but his logic and predictions scare the crap out of me because I know he’s right. I finished my second glass and it’s not helping.

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patiently, don’t feel bad, Christmas in London is almost unbearable for So Cal natives, Solvang is better. Save your money and go in the spring, I went in winter and it took four months to get the feeling back in my toes and ears.

HLS, great posts, good range, nice sarcasm and irony blended with wisdom, a pleasant read. I enjoyed your mom’s quote and will likely use it on my children. I like how you didn’t throttle or attack your counterpart but made your point, this is how the top ten or so piggy’s play and it works. btw, I sold out my interest in that property and am off the loan, thanks for the off site advice.

CMB if you read this after your weekend, most of those who have been around have laid out their R/E plays, read the old threads. I know most of the regulars situations but I learned them over time and have learned from them over time in forming my own decisions but mostly the bears know what to do, we just use each other to stay strong. We all know R/E will return to 125-150x rent but we doubt ourselves because of how slow things move, then looking back we feel good yet we think it can’t keep going down and then it does. This isn’t bearish, it’s logic and history. Unfortunately at 35 you haven’t yet experienced a full cycle as an adult, in ten years you will have and you will be able to see the big picture. Here’s my data that I will bring. To allow you to apply it to any market and income level I will take out the specifics, they are available upon request or with little effort in reading old threads, use these formulas for any income, down payment or market.

My first home purchase price was 3x my income, I made the median, bought a median home and this was at the peak of the last market, about 1991. In the mid 1990’s prices were near the bottom, sold for almost no profit but moved up to a home twice the size and cost of the median because my income had risen and I was making over the median, purchase price was 2x my income (in today’s terms, would be a 700k home on 350k income). I am cashed out now, renting, making well above the median, yet in 2006 I refused to buy because the purchase price of my chosen market was 4x to 5x my income (which has increased more than inflation). I am waiting for 3x or lower. This week I can buy that house for 3x but I chose not to, in six months I will re-evaluate. If it is 2x my income I will buy, otherwise I will wait. with inventories rising and foreclosures increasing, time is on my side. 18 months ago rent was 300x, six months ago it was 250x, today it is 150-200x. The person I rent from is down more than 30% from when they bought 2 years ago, when it hits 50%, I stop renting. That’s my data, i will buy at 2x income and I will get what I want within one year, I guarantee it.

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Sandi you are right, that article was complete crap on the part of the writer. You are right, 417 is the gse magic number, FHA varies and S.D. is 363k. It also said it would authorize up to 300 million, great, that will be less than 500 houses.

This is all political speak and won’t help anyone, Lending bubble is right, you need 180k fully doccumented and guaranteed income to pull that 700k from FHA and that is not who needs the help nor will those people go FHA. FHA rates are usually higher, require upfront mort insurance (MMI? or whatever they call it) they have the strictest of income ratios and the strictest regulations. From a buyer’s perspective I wouldn’t get an FHA loan unless it was my only option. The average problem scenario for those facing foreclosure are people who are facing a reset on a mortgage of 400k to 750k with 100k or less in income and they are upside down 5-20%, regardless if FHA is now allowed to loan them money those people won’t come close to qualifying. The people foreclosing are not short two or three hundred a month and their reset in many cases is only what the amortized rate should have been in the first place. Unless FHA decides to do stated, pay option, neg am, this is an 8 seat lifeboat for a whole cruise ship.

[temeculaguy]

Asianautica mentioned Schiff and Greenspan, these two are on opposite ends of the spectrum and Schiff actually hates Greenspan, so we can assume these two are from two camps but lately they have been making the same prediction, high inflation and interest rates in the near future. They actually cite the same rationale behind it, emerging economies like China and others parking their money here. Both feel those days are numbered and China’s costs and standard of living is rising, giving them less to invest here and more spent on consumption themselves, not to mention we look less like a sure thing.

So as a sideliner with cash, but not enough to sidestep needing a mortgage, what’s a boy to do. While I have a recession proof income I don’t have an inflation proof income. Timing R/E prices was an easy task of just monitoring inventory levels and affordability ratios but throw in the real threat of inflation and rising interest rates and this is going to get complicated. The current 30 yr fixed rates don’t jive with either camps prediction, they both see those numbers hitting double digits (greenspan sees an 8% 10 yr t-bill soon). Does waiting for another 10% decline in R/E become moot if mort rates will rise a few points or will the rise in rates further supress the R/E prices and will inflation cause rents to rise, I’m getting a headache. I just extended my lease six months until March 08 where I would re-evaluate despite having an opportunity to buy for the same net payment as rent, if rates rise significantly before then my plans may not work out. I just hope 30 yr rates hold for a few more quarters.

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Yes, the home builders saw a jump, HOV having the best day of the bunch but don’t think that trend will last more than a week or two. If you look at how they are doing on the year, it’s hard to be bullish, it’s 52 week range is 9.76 – 38.66, so to jump 3.22 to 14.55, let’s hold off on licking each other’s popsicles for a minute. It spent last year in the 40’s and 50’s, the first three months of the year in the 30’s, second three months in the 20’s and only the last two months was it in the teens. To pull the, “see you guys are wrong” card because it goes from completely crappy to just crappy, isn’t a vey good argument. Would i short the builders? No. They are already beat down so bad that there isn’t enough room to the downside left and too many people will think it is a bargain getting them for 25 cents on the dollar. Over the last two years it has been falling 10-15 every six months, which is equal to it’s current value. I suspect the majority of the builders will slash prices over the next year 10-30% to move inventory and make the investors happy. The real question is what will that do to the rest of the R/E market. HOV sold 2100 homes by cutting 50-150k per home, what will be effect of every other house in those areas losing a similar amount of appraised value, and for every house they sold, a resale didn’t sell. HOV deserved the stock pop for being the first and if they stay ahead of the pack they will make more in stock value than in building homes, since none of them are making money the race is on to see who can lose the least.

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I gotta chime in and defend my boy HLS. FFR does not translate into 30 yr rates, we all know that but if the fed abandons the inflation fight, higher interest rates will result. Adjustables may look better but their popularity is declining and should prove to be a horrible decision in about two years. Even greenspan today said he thinks the 10 yr will settle at 8% in the near future because foreign investment will dwindle. Here’s a little story quoting three guys regarding todays rate cut, the former head of the FDIC, the Mort bankers economist and a frmr HUD official, some fairly bearish quotes from guys who should be bullish.

http://www.cnbc.com/id/20834638

“If credit is bad, rates don’t count. I don’t care if you lower the rate 100 basis points. It may improve some of the profits of those institutions that lost a lot of money due to bad credit, but it does not address itself to the real problem, which is bad lending” Bill Seidman/Fmr. Head of FDIC

“The Fed rate cut has already been priced in. Usually a Fed rate cut has little to do with consumer mortgage rates except to the extent that it signals an outlook on inflation. Greenspan’s famous conundrum was that he kept raising short term rates and long-term rates did not move.” Jay Brinkmann/Mortgage Bankers Assoc

“The underlying problems that have made investors skittish about buying mortgage-backed securities are not addressed by a rate cut”

“And the Alt A/Subprime markets will not be affected at all by a rate cut. Subprime will drop from 700 billion in the first half of the year to 300 billion in the second half of the year (FBR) and nothing will stop that. The loan types that made that volume possible simply can’t be made today (due to regulatory changes)—you could lower the rate to zero and those loans are still not coming back.”

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I am not suprised this worked, it was exactly what was needed and the rest of the industry will realize why they haven’t been selling homes BECAUSE THEY ARE OVERPRICED. HOV took a stab at lowering the prices 20% and the buyers responded, now what will the rest of the market do?

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Here’s the problem cyphire, those in the business that correctly identified the peak in 2003 were proven wrong. Many were seduced back in and those who didn’t pull back in 03 confused good luck with a good plan. If everything you build sells, you never really learn how to build smart. This extends beyond the devloper/builders to most areas of the industry. To use your craps analogy, when you consistently hit the point over and over, never crapping out, it creates a false sense of security that causes you to press your bets. That’s why the casinos have craps tables, eventually they get it all back and then some. None of the national builders are O.K. and the smaller ones have even less reserves.

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Sd, you know the rule, it applies to sports, stocks, women and anything where there is a wager or a potential downside. Listen to me, then do the opposite. I’m proud of you for remembering the rule.

The chargers are missing one thing, Marty and crew. 12 teams enter the playoffs, one wins the Superbowl. The guy brings his teams to playoffs more often than not and the Browns, Cheifs and Chargers all fell part after he left, his players and some bad luck lost the game last year and now we find out the the Patriots probably cheated. So now we have Norv, great, great coordinator, weak head coach and he has no control over Rivers who was melting down and needs to be coached.

Now let’s not throw in the towel on the season, the Patriots are just better than everyone else, Chicago is one of the best in the NFC, a top 5 in the power polls, has a wicked defense and the Chargers beat them. It took a little luck and a little time but they beat them. The Packers are on fire, hell the browns could probably take the Chargers but neither has the talent of the Chargers, this is what saddens me about watching Norv, no matter how good the steak is, you still need a good chef. Norv was an afterthought in a disaster engineered by A.J. Smith, they need to start scouting a head coach for next year. The best coach without a job is Bill Cowher and as a close personal friend and former understudy of Marty’s, he probably won’t even take A.J.’s phone calls. Our only hope is that Crennel turns around the Browns this season so they don’t offer Cowher the job in Cleveland (where he played and was an assistant coach of marty’s)and S.D. can beg him to come here. What is nuts is that the Chargers will probably miss the playoffs and Norv will keep his job but Marty goes 14-2 and is fired, if the Pack beats the Chargers next week we would be lucky to have a second round playoff loss.

If the patsies roll up the colts on Nov 4th, I’ll crown them. Did you see the interview of Goodell during halftime, if the league finds out belichick was intercepting the opposing teams headset transmissions, he will be lucky if Roger only bans him for life and doesn’t have him beheaded during the hearing. The only coaching job he will see is Vick and Pacmans prison team. Collinsworth, the best analyst in the business had the line of the night “If the commish has to see Bill in his office again it will be to say goodbye.”

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