California home prices 50 percent off March 2007 peak – Why California home prices will be impacted by multi-year state budget deficits, higher interest rates, and a backlog of distressed properties.
The number one problem with the California housing market in the last decade has to do with it being in an inflated bubble. Some people just don’t want to admit that we had an epic housing bubble. The metrics are thrown off when you infuse no money down loans and Alt-A products that simply created a once in a lifetime environment. The easy lending environment and mania lasted for close to ten years. Historically bubbles of this magnitude take a long time to unwind and carry heavy economic costs with it. As we are now seeing, the California state budget deficit of $26 billion is going to need cuts and tax increases. This will exact a toll on the overall economy. The housing market in California in many areas still rings of echoes from the apex of the mania. Although banks would like to break even and leverage prime locations like Beverly Hills the lending side of the equation is now based on more realistic expectations. The market can only support home prices that reflect incomes of California families and in the last decade, income growth has been stagnant. If we look at the state from a macro perspective you can already see that home prices overall are correcting heavily.
California home price fall from peak
Source:Â DataQuick
The California median home price peaked in March of 2007 at $484,000. Four years later the median price is $244,000. This is a 49 percent drop in four years. That means in order to recover the peak price of March of 2007 home prices would have to go up by 100 percent. Does anyone really see this happening when the state unemployment rate is over 12 percent and the underemployment rate is closer to 23 percent?
Some housing analysts argue that the price is low because of lower priced home sales. They also make it seem that once the “cheap†inventory is cleared out that home prices will somehow start moving ever closer to those lofty bubble peaks. This is more wishful thinking in presentation. It is true that lower priced home sales are dominating the market. We’ve been moving out lower priced inventory now going on four years (so this is the market) and home prices will move lower for the following reasons:
-1. Shadow inventory is enormous – the amount of homes in some sort of distress in California surpasses the number of homes for sale on the MLS. As of today over 340,000 are listed on the MLS but the shadow inventory is larger than that. This figure is not static. Last month 21,000 notice of defaults were filed:
–2. Household incomes are stagnant or falling – when home sales were at their peak in 2005 and 2006 the California unemployment rate was floating in the 4 percent range. The state was flush with cash. Today the headline unemployment rate is 12.2 percent but this does not tell the entire story. How many people in high paying jobs such as finance, insurance, or even better paying construction jobs have taken up positions in a lower paying service sector role? We’ve had four years and a good number are now “fully employed†but probably earning 20, 30, 40, or even 50 percent less. In other words, buying power for expensive homes has been crushed.
-3. High leverage loans are gone – what many analysts forget is that home prices went up for two primary reasons; first it was a delusional drink the Kool-Aid mania and next high leverage loans in California allowed people to take on virtually unlimited debt to finance a home. You had option ARM borrowers making $70,000 a year buying homes at $750,000. There was no way this was going to end well. Take a look at the amount of negative amortization loans nationwide and it was even worse in California during the peak bubble years since 50 percent of all option ARMs were made here in terms of outstanding loan balance:
Source:Â Credit Suisse
Without that market California families now have to document income and obviously leverage has fallen. Take for example data on Southern California regarding jumbo loans. Last month 15 percent of all purchases were jumbo loans. In August of 2007 it was 40 percent. The market has cratered at the high end because it was a bubble!
So moving forward we still have a large amount of distressed inventory with still tens of thousands of more properties coming online in the next few years. As we discussed in a previous article Bank of American is trying to setup a legacy portfolio with Countrywide Financial loans at a portfolio value of $1 trillion and is seeking to clear this out in the next three years. A sort of good and bad bank model. How is this good for prices? It is also the case that most of the inventory being cleared out has been at the lower end but now we are seeing more of the mid to upper tier markets being brought to market as well. The recast calendar that we all remember is still hitting but banks are keeping this internal and are trying to work through the inventory in a managed way. End game is still the same. Prices will fall
Market psychology
Part of our modern world involves instant news and analysis. Yet giant macro trends like a once in a lifetime credit bubble don’t fit in well with that system. We want quick solutions. Things need to be fixed quickly. People demand answers. When will the housing bubble hit the exact bottom? When should I buy or sell? There is no exact date especially with the government is intervening on an unprecedented level to keep the banking industry afloat. Yet keeping home prices inflated merely causes home sales to collapse because you cannot have it both ways. The reason home prices reached the levels they did was because of shoddy loan practices that ignored over a decade of lost income. The only way to go back to what we had is to recreate the bubble environment. Yet the suckers are now largely gone because of touching the hot stove of Wall Street graft so now the taxpayer is on the hook for the decade long orgy in creative mortgage financing.
Prices will continue to drop and true bottoms usually arrive when most people are averse to the product. The tech market bottomed when people were discarding great technology companies in combination with bad. There is a shift to massive risk aversion of that asset class. We do not see that today. In fact, you see a large group of investors jumping head first into the market. I think many do believe that this is the bottom. This is primarily the reason many are moving now. Yet timing is never exact on these things. Just like some that sold in 2004 or 2005 and missed the peak of prices in 2007. Or the unlucky souls that bought in 2006 and 2007 at incredibly inflated prices. In the end home prices will revert to a more stable level but this can be years away. The market will not be dominated by distressed home sales and investors when the bottom hits. Yet we are years away from that. Unfortunately for some that means they will roll the dice and jump in today.
The major risks I see for California housing moving forward are as follows:
-1. Interest rates – interest rates have only one way to go from here and that is up. The 30 year mortgage rate is at historically low levels. The Federal Reserve has artificially kept rates low but how long can this go on? Higher rates means lower home prices because of the monthly nut mentality. People only care about their monthly payment and higher rates will push the cost up.
-2. State budgets – I don’t need to tell you but California faces major budget issues moving forward. The Legislative Analyst Office projects deficits of $20 billion a year for the next five years. We are already getting a taste of how this will be solved. Spending cuts and taxes. Both are not good for housing values. For homes in many areas you will see local property taxes go up since Prop 13 keeps a cap on overall state rates. In the end though on a net-net basis you will be paying more for the same or less in services.
-3. Home prices have yet to correct in mid to upper tier markets in any significant way. Home prices have fallen in every market. Yet we are only getting to the correction in mid to upper tier markets. Statewide home prices have fallen nearly by 50 percent. You can expect strong corrections in areas like Culver City and Pasadena. It is only a matter of time.
Ultimately we will reach a trough at some point but I don’t see it happening soon. Yet one thing is certain and that involves the market pushing prices lower.
Take a wild guess where the chart is heading? Are you seeing price corrections in mid-tier markets?
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110 Responses to “California home prices 50 percent off March 2007 peak – Why California home prices will be impacted by multi-year state budget deficits, higher interest rates, and a backlog of distressed properties.”
Now is a good time to buy in California!
And it will continue to be a good time to buy for the next decade. There is no rush. Our State problems in Sacramento, and the problems in DC are not going to aid in any real recovery. The policies are just the complete opposite of what is happening. Until a semblance of common sense returns, we can all watch the real estate market continue it’s slow race to the bottom.
Here’s an interesting comment from a finance guy on the bad bank scenario:
“There is a program in place today – the FHA short refinance program (Google if needed) that will be used by banks to launder refinance their bad loans into good ones. For example – by guesstimation of costs and values BTW, Bank of Albania paid .20c on the dollar for Country Side loans. They will sell these legacy debts to a “bad bank” for .30 cents on the loan – a nice profit coming back to Bank of Albania even if it is just an accounting trick. Most of these loans are either jumbo portfolio, ARM loans, or stated income purchase loans – none of which are easy to sell in the secondary market. Some of these loans will never come back. Those homes will become part of the REO landscape. The remainder will be refinanced into shiny new FHA loans at .60c on the dollar, then sold back to Bank of Albania (my guess) to service.
Since the home owner owes 100c on the dollar and is refinanced to .60c on the dollar, they are in great shape! The borrower now has a mortgage close to the property values at present. It appears they got a 40% reduction in their balance. In fact they’ve had a 40% increase in the value of the mortgage (.20c that Bank of Albania paid for the loan from Country Slide)
The “bad bank” just funded a loan at .60c to the dollar that cost them .30c. Looks like they’re making money on bad debt, eh? Now these no-recourse FHA fixed loans are easily sold because of their government guarantee. Bank of Albania (in this example) is more than ready to take on these loans given that they are likely also 2-3% higher in rate than what they sold off!
Much more will be said shortly about this program by blogs and the MSM. The ship has left the dock and is going full steam ahead towards a general principal reduction refinance loan for some, not all loans. Since my loan and perhaps your loan won’t be afforded the benefit of a principal reduction, my financial advice in the next few months is to go long pitchforks and torches. My guess is that WalMart and Target will run low once the Short Refi program is really off and running.”
Humans are often irrational, this drove the bubble as much, or MORE than loose money. One of my best friends is buying right now in MBeach. I have shared DR HB with him several times, begged him to be patient, given him plenty of info to make an informed decision, but in the end people do what they want, not what they should.
But, but… aren’t the proverbial Asian buyers, and their proverbial fat bags of cash, almost nearly about ready to think about jumping off the fence and saving duh market?… lol.
Seriously, this is indeed a once in a lifetime Bubble–that’s how the banksters got away with it! Literally everyone with adult experience of the 1920s is gone, or at least, no longer at the levers of power and influence.
Nothing to add to what DrHB posted here; except for the state budget crisis, you can substitute “FL” (or AZ or NV) for “CA”…
In October 2011 the conforming limit will drop to $625,000 from $729,000 How will that impact the high end houses? No one talks about it.
What a joke 100k is not going to make a difference!!
this change may drop your $1M bubble home another 50~100K, with the former coming packaged up with other concessions to make the home more affordable for people who want to avoid that jumbo loan. the psychological effects of this change may trigger even greater drops in prices for the 1M+ homes.
in the current economical environment, 100K is pretty decent change, especially when 100K is what stands between you putting minimal down vs being forced to put 20% down, which is 125K at minimum.
Au contrair, GMan, that $100K is going to make a HUGE difference in the mid to upper propeties. Prices in many prime areas have a built in “bottom” at present of around $750K. Why is that? Because people who can qualify for the FHA jumbo conforming limit of $729,500 with very little down, are opting to take it!
These are the present day subprime/Alt A option ARM loans, and are failing in droves. As soon as the $625K limit is in place, you will see many buyers in these areas lose $100K of affordability, and prices will quickly adjust lower to the new reality. $750K floor will become $650K, and $100K of equity will be instantly lost by the people who bought at the “bottom” in 2009 and the newly formed double dip of today.
Just like min wage, it dont make anybody any wealthier, it is just an artificial floor.
It is not really that bad. Teacher’s in our school district (average salary over $80,000. a year), are still getting their raises.
And a lot of people work under the table for cash. Go to any Home Depot parking lot in the morning, and it is filled with illegals looking for construction work.
By 8 AM, they are all hired. No employee taxes for the employer, no income tax paid by the workers.
Win, Win situation.
“It is not really that bad.”
LOL
Video: CALIFORNIA ISSUES 19,000 TEACHER LAYOFF NOTICES 3-16-2011
.
Drink thee deeply of the kool-aid.
Those are layoff NOTICES, not actual pink slips/layoffs, Tyrone. The school districts send out these notices months in advance in order to get the teacher’s union and the public riled up about the lack of funding, so they go rage against their representatives/Sacramento about budget cuts and ensuring these potential cuts get reversed. How many actual teachers have been laid off the past few years? It wouldn’t surprise me if it was one tenth, or less, than the actual layoff “notices”.
Making over $90,000. average teacher salary in 6 districts- see below
I’m gonna go ask my boss if I can take the summer off.
Don’t forget “other” income also…..up here in Sonoma County I know quite a few young couples my age (early 30’s) that have two jobs and in order to rent a nice place for $1600/month….guess what they’re doing in the garage…..CA’ green gold rush.
One couple I know, their boomer-parents from back east lost so much in their 401k they’re moving to NorCal to grow for a couple years and try and get their money back before retirement….
Strange days…..
Oh drat, oh damn, I wish I’d known they were your friends… you see, I just sold a pair of H&K MP5-SD6 silenced submachineguns to some guys named “Pepe” and “Emilio”… they’re gonna wait ’til your friends’ “crop” is ready to harvest, then cut themselves in, so to speak. ;’)
I kid… seriously, nothing wrong with free enterprise, esp. when bypassing .gov causes no social harm, as with naturally-occurring plants. I just think that “field” (if youi’ll forgive the pun), is going to be quite over-subscribed, with retail prices following the housing market… esp. in NorCal.
Ya that’s really going to work out well for their finances when they have to spend the rest of their 30’s in prison.
you musts not live in CA…..nobody goes to jail for pot.
Slam the teachers Michael. Truth is about 20,000 teachers across the state are getting pink slipped this year. The final number laid off will be a lot less as districts have to give out more to account for seniority. The truth is a lot will be laid off since I doubt the “temporary tax increases” will get voted on the ballot and pass.
We must live in different neighborhoods as I always see guys out at HD, even on a Sunday at mid-day.
Well, this is a good time for schools to get rid of the dead wood. 10% of teachers are good, 80% are ok, and 10% are just going through the motions.
Now the schools can get rid of them.
Sam,
Teaching is not an anomaly. Whatever the percentages are for teaching, they’re basically the same for most other occupations as well.
The real reason they give out (far, far) more pink slips than actual layoffs is that when people hear thing like “20,000 TEACHERS ON THE CHOPPING BLOCK!” it is much easier to convince the public to vote in yet another bond measure. I mean, just *think* of the children! I mean, think of them right now all cute and innocent but don’t think of them in 20-30 years grown up, grubby, starving, and trying to huddle a crudely built campfire in a steel drum on a city sidewalk because the tax man came around and took whatever little they had and wrecked the commerce needed to rebuild it.
Actually according to this LA times article it’s 30,000 teachers that got notices.
http://articles.latimes.com/2010/mar/24/opinion/la-oe-daly24-2010mar24
I don’t know of many districts that are giving teachers raises. In reality most districts have furlough days so those that still have jobs are taking salary cuts.
Michael must be a realtor (emphasis on small r) or live in some la la land because the rest of the state is suffering.
Sure, the budget for education has been reduced, as everything else has, but that isn’t the reason sooo many teachers are getting pink slips. You see, a certain dollar amount needs to be cut. If the teachers’ union was truly concerned about keeping its member numbers high, then they would pink-slip the fat-cats making the $80-100k salaries. . . . .you know, the same folks with the huge pensions. Alas, only the newbie teachers who make the minimum $40-45k and teachers aids who make next to nothing are pink-slilpped. That way they can say they had to cut soooo many jobs when in reality only a fraction of staff and teachers needed to be slashed. It comes down to who gets slashed. . . .not the fat-cats making the union decisions.
I disagree. The Home Depots on Jefferson Boulevard in Los Angeles and the one in Temple City are full of illegals all day looking for work. By 5 PM, a still a bunch are out there and no work.
I can say Matt is correct concerning those particular Home Depots.
I concur with the Jefferson Home Depot in Marina del Rey/Playa del Rey, as well as the Sunset one and the one in Cypress Park. Tons of “day laborers” aka criminal illegal aliens loitering all day.
If the work dries up, eventually they’ll go home, right?
Try asking someone who just graduated from school with a teaching credential and 4-year degree how it is for teachers. They are still working some p/t job at $10 an hour trying to pay $40,000 in student loan debt. The education system they were brought up in swore their would be jobs from them if they just got a college degree.
4 school districts in CA. pay teachers an average of over $90,000. a year.
Another 6 districts pay teachers an average of $89,000. to $90,000. a year.
If all teachers would just take a 15% pay cut, there would be jobs for everyone.
But of course, the union mentality is take the people with low seniority, and throw them under the bus.
I live in San Luis Obispo and southern NM.
There are teaching jobs in Las Cruces, NM; reason how I know this is because my law office represented a firm in Los Angeles that brought teachers from the Philippines over to teach in areas of the USA where districts have had problems in locating American teachers. Las Cruces had hired a number of teachers from overseas.
There are a number of Cali ex-pats here, mostly from the Bay Area. I am the envy of everyone since I go back home every few months and stay a while on the Central Coast and also in Orange County 🙂
Rentals through Steinborn realty and Stull real estate.
~Misstrial
Michael’s comments about teachers is so incorrect I have to assume he was trying to be sarcastic. The average teacher’s salary is California is somewhere between $50k-$60k. Many school districts took pay cuts/furlough days in 2010 and many more will be doing the same in 2011.
What I love about this site is the consistent use of data and facts to support the content. What I hate about the comment section of this blog is the use of opinion and uneducated thought used by some.
Average teacher salary in CA. is $67,932 per CA. dept of education
Seriously Michael? You have bankers getting paid multimillion dollar bonuses after getting taxpayer bailout money. You have the management of health insurance companies making millions while raising the premium prices of insurance on millions individuals and smalls businesses. You have silver spoon babies, i.e. Bushs, Kochs, Kennedys, who don’t do anything but manage inherited dynasty money and they pay someone else to do even that. You have a continuation of tax breaks from a time when the US had a revenue surplus during a period of deficit. You have montetary policy geared to reward the investor class gambling in stocks instead of rewarding people who live by the motto: “A penny saved is a penny earned.”
And, your brilliant comment is to imply teachers get paid too much. Tell you what let’s have a little competition. You research teachers’ unions and I’ll research investment banks.
You tell us when was the last time the teachers or their union f’cked the entire United States economy?
I’ll do the same for banks. Oh…done with my answer: The last time the investment banks f’cked the entire United States economy was 2007.
Patiently awaiting yours.
Well said Ryan. The good news is that with the collapse of the dollar, you might not stand a chance of pulling even with them, but at least you can gain a little ground. The billionaires can’t put very much of their portfolios into gold and silver and other tangible ‘things’ without pushing the prices of those things up against themselves.
They are pretty much stuck in dollars, yen and Euros. But us little guys can put a relatively large chunk into tangible stuff, and survive the coming hyperinflation.
Unfortunately, I wouldn’t call a house a ‘tangible’ good. It is a hybrid article, with a tangible component and a monetary one. The tangible portion of a house is the sum of the worth of its components (wood, nails, land, glass, labor, etc,). The monetary part is the huge markup that is put on the price by the massive leverage handed to buyers (put down 3% and finance the rest). When everyone has to put down 20% in cash, the price of houses will move closer to their actual worth.
99.99% of people are not bank executives who make large salaries. If you include a very lucrative benefits package and payroll employer taxes, a teacher making $50,000 in california makes closer to $100,000. Given that they work only 9 months out of the year, they cost about $48 per hour to employ.
A non-management college graduate in California makes, including taxes and benefits $25 per hour ($52,000 per year = 40,000 salary x 30% of pay in taxes and benefits). How can the tax paying public pay so much in taxes to actually pay for the benefits of these teachers? Why should they get paid so much more for 9 months of work with 16 paid holidays, when non-governmental employees work 12 months and get, on average, 6 paid holidays each year? Why should we pay so much when they would make significantly less if they were working in a non-governmental job that requires the same knowledge, skills and abilities?
It would be nice to be able to pay them high rates of pay, but we obviously can’t anymore, just like the government can’t pay bank executives their millions (TARP anyone).
Leave the banksters out of these commentaries. That argument is a red herring.
@Ki,
You obviously don’t know any bankers well enough to know what they pull in. Your basic, run of the mill bank branch manager makes more than a teacher in CA and those are the ones that may or may not have a college degree. And, they are the top of the low tier in banking. Once you get past that and get into the personal bankers, investment ad visors, auditors, accountants, regional managers, etc., which most people don’t really see on a daily basis , these salaries blow by teachers. Most of these have some form of certification or higher education. And then dear Ki, you get into upper management with it’s obscene salaries and bonuses where the bonuses themselves are more than a teacher makes in a year. So, don’t try to pawn that “not everyone is a CEO” garbage off on me. Just because you don’t want to talk about the banking structure at all levels or are not informed enough to know better that doesn’t make banks a red herring.
But let’s move on to “non-management” college graduates. Let’s see: Engineers make more than teachers. Software engineers make more. Physicists make more. Chemists make more. Accountants make more. Lawyers make more. Doctors make more. Translators make more. R&D of any major pharmaceutical, energy, and defense corporation make more. Psychologists make more. Pharmacists make more. Dentists make more.
What the hell kind of job are you comparing to teachers? Sure, teachers make more than cashiers, burger flippers at McDonald’s, house cleaners, construction workers (maybe). All these jobs that don’t require higher education.
Finally, you obviously don’t know a lot of teachers Little Ki. The regular school year is 9 months. Then, there’s summer school, summer programs, summer camp, tutoring, continuing education to maintain credentials.
Makes me wonder Ki, do you have a child or two? Are they nimrods because they study only 6 hours a day in school? Or do they have homework that they do outside of school? Do they have music lessons, sports or other extracurricular activities? If your kids do more than just go to school and watch the boob tube, then you know there is more to their education than the 6 hours M-F they spend in class. Yet, you have the gall to imply that teachers simply don’t do any work other than the classes they teach during the school year.
You have to be a troll. Honestly I know several teachers. They don’t make anywhere near the imaginary amount you quoted, they aren’t getting raises and have had instead enjoyed mandatory furlough days for quite some time now. You account of teachers living the good life and illegals living the good life is complete fiction. aka liar liar pants on fire.
see below
@Gael, yeah some people just have no concept. I’m not a teacher and I still know better because I had some darn good teachers in public school growing up and a couple crappy ones (more crappy personalities than lack of knowledge).
@ Michael, still waiting to hear from you about how many times the teachers’ union has f’cked over the United States economy. Yeah, I know…bullies like to pick on the little guy and suck ups to the bullies support sticking ito the little guy. I’m guessing you’re not an ultra-rich corporate CEO, but I could be wrong.
@Taz, here are some fun facts to put stupidity in context. Souced by EDD in CA. (No overtime or benefits included).
1) Minimum wage in CA is $8/hr, which equates to $16,640 a year.
2) Median annual wage for Auto Mechanic: $39,400.
3) Median annual wage for Tow Truck Driver: $42,250.
4) Median annual wage for Pipelayer: $51,350.
5) Median annual wage for Carpenter: $53,650.
6) Median annual wage for Electrician: $54,600.
7) Median annual wage for Elementary School Teacher: $60,000.
8) Median annual wage for Middle School Teacher: $61,250.
Now two of these 8 are considered a professional white collar careers. The other six are considered blue collar working class careers. Two of these require some form of higher education and maintaining credentials, both of which cost money (you know that green paper stuff that people borrow to go to college and pay back over the course of years unless you were born with a silver spoon in your mouth). The other six can be apprenticed, vocationally trained, or specialized schools, which still costs money, but significantly less.
Now do you seriously want me to go through the other professional white collar carreers that make more than teachers….again. By the way most of the other white collar careers have an annual bonus structure, 401K, medical, dental at a minimum in addition to their base salary.
One final note, you complain about pensions for the workers in the public sector and cry that private sector workers don’t have it. Perhaps your too young to remember that pensions were once common in the private sector until the early 1980s when 401k’s popularity took off to give the shaft to the private sector workers. You kids today. You allow billionaires to f’ck you over, then complain about your fellow middle class Americans who haven’t been f’cked over by the billionaires yet. Way to throw your fellow middle class American taxpayer under the bus.
Dasher, you’re wrong. I’ve worked in human resources for over 20 years, and many of these jobs you mention (especially those that do not require a doctorate degree) make less than a teacher, especially when you factor in hours worked per year and benefits. You should check online resources. A non-management, college professional (similar to a teacher, as they are not management staff) make significantly less than teachers.
Of course, when you look at the salaries of a very small percentage of the population in positions that demand more knowledge, skills, abilities and managerial responsibilities than a teacher, you will come up with higher pay for your comparison, but you are comparing apples to oranges.
Find a college educated non-management employee for your comparison, factor in compensation and benefits, and you will find that California teachers make much more than most all other similarly qualified employees.
“Teacher’s in our school district (average salary over $80,000. a year), are still getting their raises.”
I’ve seen this number so many times in this forum that now I’m wondering where did it came from? Show us the source or it’s out of your own hat. And it’s always “our school district”, not any named so anyone else could check. _What_ school district, name it?
I’d bet this is a blatant and knowing lie: Random round number and no details whatsoever.
while there are many comments here about teacher compensation, it’s really a problem with public employee salary and benefit packages not available to the private sector worker, but paid for with their tax dollars. many public emplyees will retire after 33 years (age 55 if enter workforce out of college) with 100% of their highest year income as their pension and full medical benefits. private sector employees will retire at 68 with paltry social security and medicare benefits after paying into the system for 50 years more or less.
Average teacher salary in CAlif. is $67,932 per Ca. Dept. of Education.
6 districts have AVERAGE teacher salaries of over $90,000. a year.
Santa Barbara, Mt. View, Portola Vallley,Laguna Beach, Los Gatos, and Woodside.
Many other districts have average salaies over $80,-000. per year.
Complete list can be found on Sacramento Bee website.
Thomas (and others) asked about “facts” for teacher’s salaries…
http://www.payscale.com/research/US/Job=Elementary_School_Teacher/Salary
–notice that this link is for elementary school teachers (often paid less than HS teachers)
–LAUSD elementary payscale is $50,615 – $72,706 NOT including benefits and retirement
This is probably the best site on teacher’s salary, broken down by county, then school district. it actually shows base pay, how much is allotted for benefits and how many days they work each year…right now, I have it linked to the Long Beach District…which shows the lowest salary is $44,267 avg. is $73,451 and highest is $93,280 for 182 working days a year…and they get a pension and some serious benefits cash to buy Health/Life/Disability insurance… not sure how/why your friend has to drive a 21 year old car and tutor, etc. “just to scrape by,” I wouldn’t say he/she is “living large” if he/she is at the minimum scale, but sure is in better shape than a lot of peeps out there, especially if he/she has been teaching for more than 2 yrs and has tenure…you wanted facts, well the facts support about an $70-90k avg for CA teachers if you are looking in LA, OC or SD counties…i’m sure Bakersfield teachers make less, but….teaching looks more lucrative than my Federal government job with a Master’s degree 😉
–http://www.ed-data.k12.ca.us/fiscal/TeacherSalary.asp?tab=0&level=06&ReportNumber=4096&County=19&fyr=0910&District=64725
And finally…http://teachersunionexposed.com/state.cfm?state=CA
— this a great site that shows how much money the California unions raise in annual union dues…the California Teacher’s Union collected $294 million dollars in 2007-2008 from it’s members…which is indicative of how much money teachers must be making to contribute that much (and that is only one California teacher union).
Please take all comments with a grain of salt. There is ample evidence that some are computer generated by corporations. Google “HBGary” – they are firm that provides a service that involves influencing opinion in comments of many websites. Sounds like a paranoid fantasy but it’s the real deal. This works by creating an army of “sockpuppets,” with sophisticated “persona management” software that allows a small team of only a few people to appear to be many, while keeping the personas from accidentally cross-contaminating each other. Then, to top it off, the team can actually automate some functions so one persona can appear to be an entire group with opinions a corporation wants disseminated. I wish i was making this crap up but it’s true.
All of the illegals are hired by 8am? Really? You should come hang out at the Home Depots in San Diego…I was able to pick up two guys for $20 TOTAL to come load all my crap into the UHaul for my move across town…at 2pm in the afternoon because they didn’t have any work all day…and I had to tell the other 6 guys trying to get in the car that I only needed two… ended up giving them a total of $30 for the 1.25 hours of work…I do think, as Tyrone said, you need to back slowly away from the KoolAid…
Yeah, Michael, you’re right. I can’t stand it when I can’t reserve a table at my favorite high end eatery because all those damn illegals are there first, or, my Mercedes dealer tells me that those damn illegals just bought up all the AMGs he had in stock in silver. Damn illegals. I should get my act together and get out of this cube and go down to the Home Depot lot to make my riches too, but, I guess I’m just too lazy.
The good bank / bad bank model has always interested me from an investment perspective. It is, of course, designed to isolate the underperforming portions of a company’s portfolio from the rest of the (hopefully) still profitable core business. But keep in mind, all portfolios have items of varying performance levels. When a spinoff occurs such as BofA is doing, it really underscores the enormity of the problem.
To put it in a simpler way, the bad stuff is so bad, and so massive, that mixing it with the good threatens to completely overshadow what good remains. The scope of the problem cannot be under emphasized… so you’d better believe prices are going lower.
Interesting rumblings we’re now hearing from the investment community as well. Everyone remember’s PIMCO shedding some long term US Debt holdings in their total return fund a few weeks back, to which Mr. Gross attributed to “yields not in line with historical averages,” and better yielding opportunities abroad. And just this week Mr. Buffett remarked during his visit to India that he can easily see the value of the US dollar eroding over the next 5-10 years. Not instant armageddon as some people make it out to be, but interesting to say the least.
If both those men are right (and I would not argue the world’s richest man, or the founder of the world’s biggest bond fund), then you can rest assured that there will be no QE3, and interest rates will rise soon. The Fed is now backed into a corner where any more stimulus will have serious negative long term effects on the economy. They have reached the limits of what the market will bear.
That means they are shutting down the life support for the US economy. And it still has this festering gangrene called a housing bubble. But the sooner we amputate, the sooner we can get the economy back in rehab to learn to walk again, and the sooner it can get on with things.
An interesting and well articulated position. Thanks
“To put it in a simpler way, the bad stuff is so bad, and so massive, that mixing it with the good threatens to completely overshadow what good remains.”
Or put it even more simply: The bank _has to_ separate the bad to different part because the bank is, by any measurement, bankrupt.
Putting the bad parts behind the wall and then bankrupting that part leaves debtors without money and the owners rich: A bankrupt fraud if any. In major scale.
I don’t doubt a second that FED allows it, it’s allowing even bigger frauds every day, at least last 10 years.
I wouldn’t say the banks are insolvent. That would imply that they do not have cash flow to pay their debts on time. I don’t think that is accurate.
They do have a balance sheet problem though. What they thought was worth a trillion dollars is worth far less. So, to keep those underperforming assets on the books would cause the banks to have severely restricted access to capital… not a good idea when you are a lender.
They are definitely crooked snake oil salemen though. Sold those mortgages for big bucks, and pocketed the profits. Then they securitized the default risk on those same mortgages and sold it to someone else.
“It is not really that bad. Teacher’s in our school district (average salary over $80,000. a year), are still getting their raises.”
Amazes me how some people are completely clueless.
Yeah, it’s not like those teacher’s salaries are coming out of your taxes or something silly like that. Of course, if we all took a lesson from that illegal labor in Home Depot’s parking lot, we might find that we can kill two birds with one stone.
It always amazes me when people that are clueless comment that those teacher salaries are coming out of our taxes therefore they are paid too much.
There are those out there without kids that feel they shouldn’t have to pay anything of their taxes to the schools either.
Maybe those people should look up what it costs to incarcerate a kid,(or later adult), that turns to crime because they don’t have a good education. Far, far more than it costs to educate them.
As far as pensions go teachers put in a portion of their salaries towards their pensions. It’s not all funded by the state. Look up the formulas. It’s fireman and police that get 3% (X salary) after 20 years when they retire or state workers that can retire at 55 with 2.5%. When you get to teachers it’s 2% and if they retire before 60 it comes with a hefty penalty.
There are good companies out there that pay matching or somewhat matching funds to employees 401k’s and additionally have bonuses. No they don’t have pensions but it sure adds up.
Oh didn’t you know? This is all the fault of public workers and illegal aliens The corporations, banks and politicians are our friends and always look out for our best interests.
Is it beyond people to comprehend that this is not about labors unions versus wall street? Here’s a hint, ask yourself what the two have in common that makes them both corrupt and then perhaps you’ll wake up to reality.
A friend is a High School English Teacher in Long Beach and he is making *far less* than $80,000. He has no savings and drives a beat up 21 year old car with worn out shocks. He tutors after hours and has to work 7 days a week to just scrape by. Rents in the LBC.
It is the slow time of year for the real estate market and people are gloomy like the weather today. But by Thursday, the sun will be out and the temps will be 25 degrees warmer and people will forget about today. Right now most of the sales are distressed. Come Summer, that will be the real test of the market.
It is obvious that the banks want to unload their bad loans and inventory and put that behind them, so prices should go down at least 5%, could be more, depending upon the economy.
Another factor is the price of gas. The homes in Riverside and San Bernardino, and elsewhere where the commute is already long, should go down in value with the renters of homes moving closer to their jobs. I know folks who buy homes to rent in the outlaying areas as “investments”.
The funny thing is, in the Bay Area, prices have not really fallen that much.
In the city and on the peninsula, housing is still completely unaffordable – if you don’t have a family income of over $300k, you cannot realistically afford a single family home here, and to see the government continuing to prop up home prices at these levels is beyond infuriating. I’ve actually asked my boss if I can move and got a preliminary ok after I take care of a few things here – count me as one more accomplished professional LEAVING CALIFORNIA because it’s so expensive to live here that even someone making over $200,000 a year cannot afford a decent place to live within a reasonable commute. Sustainable? I don’t know, but I’ve been waiting a long time for things to fall, and if it takes another decade of stagnation for a home to become affordable, that’s a decade I don’t have to wait.
California, f**k you.
If the govt would get out of the real estsate game NOW, we would see prices in the Bay Area plummet. Problem is the phasing out of Fannie and Freddie will take 7 years. Almost a lost decade. Your making the right decision, and many, many others will follow in your stead. I expect to see more companies pulling up stakes and heading either north or east to more business friendly locales. California is becoming Michigan West.
This is the first comment about the Bay Area housing, most of the other comments are about south cal. I’m totally with you Jim, Bay Area home price still have 30% room to drop. We can easily rent a place for 2300$ a month while the next door is selling for 800K, even with 5% interest rate, I don’t see why people will buy it unless they are betting on the price will go up 100K per year.
I’d bet no one buys they house for 800,000. There are still many deluded homeowners all over the state who think they can get those prices. Without substantial wage inflation (not gonna happen) the housing market will stagnate. Could potentially take a big dip down end of this year as people realize there’s no bump from summer sales, banks speed up foreclosures and the economy isn’t really improving. There’s no real reason for anyone to buy right now is there?
Matthew, agree with you 100%. There are a lot of desirable areas in the Bay Area where asking prices are $800,000 and up, but you can rent the exact same style of house for between $2300 to $2500 per month. Real estate agents target two income families of professionals making $120K- $150K who don’t understand real estate despite their college education. If you scratch the surface of some of these 1950-60s houses, you see sales in the mid-90s of $300K or so.
Agreed, but prices at the high end in the Bay Area are finally starting to fall. Last year, it was “oh, the good areas will never decline”. Now they are. Including Palo Alto, as well as elsewhere on the Peninsula, Probably go down at least 10% this year.
There were a lot of people who bought there during the tax credit rush of last year. At $1 Million+ for the prices, that’ll start dinging many a net worth.
Trying to help a sister in Silicon valley navigate thru housing
will fixing yeild spread premium and April 1st
and change in Oct 2011 to loan max from $729 to $625k
bring Menlo Park/Palo Alto home purchase into a “not underwater in one
year” purchase?
I can absolutely agree with you. I got so tired of living in mediocre rentals in SF, that I moved north and finally out of the state. I moved near Ann Arbor where we bought a nice 2000 sq. ft. house on 10 acres for $275k. I never went back to California, although I live in the Seattle area now. I have concluded that the West is the best.
Now, now, let’s not “eff” off the entire State, Jim.
Where are you going? Have a position lined up?
An atty friend just couldn’t get a law job over $40k/yr even with a T-1 degree and had to move back to TX and live with his parents.
~Misstrial
How many home are the bank sitting on with people who haven’t paid for 2+ years and they are just waiting for a better market. This thing is going to drag out for a decade at the rate the banks are taking back these homes. I several people including myself first hand that haven’t paid in over 2 years just waiting for the sale date and it never comes. My house has been vacant for almost a full year and the bank knows it, yet they won’t give a sale date. If I’m actively seeking foreclosure and can’t get one imagine how long the people who actually try to delay the process are getting. I’d really like to know how many others are in this situation.
Ya see, you’re missing the point. The point is not that prices are lower. The point is that prices will rise because that is what real estate does. It goes up. Yep, up, up, up. Listen to your Realtor (TM), not some retarded so-called economist with his fancy diplomas and phoney statistics.
Ask anyone who’s trying to sell now in so-called “prime” markets like Santa Monica and you’ll know more pain is on the way. If the spring selling season heats up everyone who’s been waiting for a big correction will have to wait longer, but I don’t see that happening without some surprise massive intervention. I’d bet money that spring 2011 will be remembered as the final capitulation of the 21st century housing bubble.
I agree. This Spring will be the last best chance to get out, IMO. The Fed is going to end the obvious QE 2 program, and try a stealth QE using the cash flow that they are getting from the “assets” that they’ve purchased. This will fail, and the failure should be obvious to all by the end of Summer, IMO. In the meantime, no help for housing this time.
After that, it should be pretty obvious to even the most starry eyed home buyer salivating at getting their “piece of the pie” that housing is a bad bet. Even for those crooks grabbing a 3% down mortgage.
Heck, why would anyone put 3% down, when all it will get you is being underwater within a year?
These should be an interesting couple of years.
Never underestimate ignorance tho. Seems like the people buying now are the ones who think they’re getting a “deal” since they’re paying less than what houses went for 4 years ago. Once th
Oops. 🙂 We’ll really know the bubble’s burst when those people stay away from houses.
RE comps on the way down: “Look this place up the street sold for $1M 2 months ago, so this one is a bargain at $800K” SOLD American!!
“Higher rates means lower home prices.” And as we have seen lower rates means lower home prices…I guess it’s good to never be wrong in predicting lower home prices.
Gosh, you just happened to not finish the sentence, because you dropped off the quote:
“… because of the monthly nut mentality.”.
That changes the sentence completely. You’re being disingenuous.
How higher rates affect prices depends on many things. But regardless of those, the very first thing which much be overcome is being able to afford the monthly payment.
Or, are you suggesting that in the present environment, where people are facing declining jobs, declining real wages, and higher taxes that people are going to be lining up to take out loans with higher monthly payments? While housing prices are still going down?
That seems to be quite a stretch. Do explain how this miracle is going to happen and save housing.
“Listen to your realturd?”
Was that sarcasm?
I’m stunned by some of the idiocy here.
Oh yeah, teachers are breaking the bank, starting out at 35/40K.
Morons.
Wall St. stole TRILLIONS of dollars and you nitwits hop on the teacher bashing bandwagon. I can see the spit drooling from your chins.
Real estate is going up because that’s what it does?
BWHAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
First it’s going DOWN some more…and then for the next 15 years it’s gonna flatline.
Look at Japan Einstein.
Don’t come onto THIS forum and try to fluff RE unless you want your ass handed to you.
Hey Robin, Expat was giving us a heavy dose of sarcasm…had to be.
It doesn’t matter what teachers, DMV workers, police, fire fighters, etc. make in salary and benefits. The bottom line is that states and local governments are going have to cut spending by a huge amount. They have gone through all the gimmicks like tobacco settlement money, lotteries, bond issues, stimulus money (from the broke federal govt.) and so on. It is the end of the road.
The global economy wasn’t my idea, but it is here now. If you want to do phone customer service or phone tech support, you best be living in Bangalore India. I have no idea what they pay over there for reasonably skilled phone help, but I assume it is way less than the $15/hour (or more) you would have to pay here, plus fica, unemployment taxes, etc. (for a job with no benefits)!!
The biggest problem with this ‘global economy’ they have created is that they can’t inflate their way out of the problem, like they did in the 1970’s. Back then, everybody’s debt got inflated away and rising housing prices saved the day. They can’t ‘inflate the problem away’ now because wages can’t rise. Just the opposite. Companies and government units are CUTTING salary and benefit packages.
It is not just teachers that are going to get laid off and suffer pay cuts over the next year or two. Just about everybody in our society is going to get the treatment. When you see the the federal budget deficit is 10% of our GDP ($1.5 trillion), that is pretty scary. That is how much our economy is going to contract over the coming years. They will fudge the statistics, but the knowledgeable people will see through it.
Right you ARE! How come nobody mentions NAFTA? We helped our northern and southern neighbors IMMENSLY, but the consquence was downward pressure on local wages, so many of those jobs went to mex and canada. I never been to Canada, but I can tell you pre NAFTA mex and today northern section of mex is HUGE difference. used to be able to drive all the way to Ensenada, and not see anohter car or truck on the road. Now it looks like the 710 fwy at rush hour!! The automakers have large factories in canada and mexico all because of NAFTA and maquilladores.
Well if the republicans succeed in refusing to raise the debt ceiling as they have been saying, we might see 10 million dollar houses in the inland empire. Zimbabwe here we come!
True, true CABoy…of course that $10 million dollars will be worth what $100,000 is today (or maybe even $10,000 today). But we’ll be far more concerned with buying loaves of bread for $200 or more a piece…McDonalds will have the Hundred Dollar Menu…99 Cent Store will become the 99 Dollar Store.
NO, if debt ceiling isn’t raised, you get .90 cents on the dollar instead of 100% of your bond face value. Makes sense CUZZ THAT is ALL its worth!!! Or you raise it (debt ceiling) and you get face value…but the $1 now only buys 90% of what you want. Do you get it now? There is no free lunch. Look beyond the donkey and elephants, and use your own brain.
Unfortunately caboy, you have that perfectly backwards. Think harder and try again.
Actually, Joe, he’s right but for the wrong reason, I’m guessing. If the government shuts down for any considerable period of time, it will make QE-3 a certainty. And it is QE-x that is fueling hyperinflation. This is somewhat of a moot popint, since there will some sort of QE-3, but a govt. shutdown gives the fed the cover to do it more openly.
There is no way out of a bubble hangover. Any attempts by the government to cut spending will hurt the economy. Alternatively, if they don’t cut spending the fed will have to monetize ever larger piles of debt, destroying the dollar. If there was an easy way out of these financial bubbles, don’t you think someone would have figured it out a long time ago?
Joe Average ,I am interested in your logic.lets say the republicans ucceed and do not raise the debt ceiling. What do you think will happen-we will be forced into default. Then our ratings will be cut and this will prevent many firms/entities from holding treasuries. Considering we have close to 15 trillion dollar in debt and are adding 1.5 trillion a year in deficits and we also have a current account deficit-how do you think we will end up with dollar strengthening. The yen is different-they actually have acurrent account surplus and most of their debt is held locally.
Caboy, you implied that not raising the debt ceiling will create hyperinflation. So, more debt = less inflation. Is that your final answer?
The US government can print money to pay off debt. The more debt, the higher the likelihood of having to print. Stopping debt-financed spending will force our representatives to align the current level of spending with current tax receipts.
Don’t get confused with all the political jargon and nuance; current accounts, capital accounts, monetization, quantitative easing, debts held locally or internationally, etc. Republicans and democrats both use terms to hide basic truths. In the end, they promise more and spend more than we have the ability to pay. People are waking up to this fact, and the faith in those promises (and the currency they are provided in) is being destroyed.
Now that is an intersting point. Look at Santa Monica/Pallisades. Not much is moving, Prices have drifted down slowly in the market I am looking at, SFR 1500-2000SF 3B/2b. If you will move to a fixer in sunset park (“mid-tier” SaMo) then you can get in for around $800-1M, but look for something not next to the airport or freeway, and in better shape, and its still $1.25M for a “starter” home.
There are all the factors discussed on this site that create downward pressure (massive shadow inventory, unemployment, rates rising soon, taxes rising, etc etc, ) but there is also incredible demand to live in this area, as soon as something lists for a little low, it gets snapped up. Sharks are circling. All it will take is inflation, and then this plus the demand for these neighborhoods, and you will have a few nighborhoods in la la that are beating the predicitons. These are neighborhoods that could actually start to rise… I think it depends on inflation.
Im trying to short sell my condo now (bought in 2005) in the Marina. Bought for $790K, got an offer for $550K. If this short sale goes through, I won’t be able to buy for 5 years or more. Fine, I usually tell myself. Things are flat and probably going to get worse…. I will rent while the market stagnates.
but what if…
Gas prices push all the IE to move to rentals in LA.
Raising rental rates across the board.
And then hyperinflation kicks in.
Inflation is the only way we are getting out of debt as a nation. It seems likely with all the QE. Then the money on the sidelines starts getting worried and jumps in to hedge the bet. Now RE prices are going bonkers again in certain high demand places.
So if there is even a decent chance of this happening, then I should think about jumping in rather than being forced to wait 5 years or more. By then both prices and rates could be craaazy.
And if I’m wrong, and Santa Monica mid-tier drops another 15% , well, at least by 5-10 years out I will have some equity still becuase of my low interest amortizing loan… and Ill be 1/3 of the way to paying off the 30 yr loan…
And let me say up front, Im a doctor not a RE agent troll.
Ive got $100K to put down, all in. Once I skip a payment to push the short sale through my credit goes bye -bye for 5 years or more. So this is my chance.
What would you do??
A. Keep paying and wait for 6 more months to see what happens in summer 2011
B. Jump now and buy a mid-tier starter in Santa Monica
C. F*#k it! Live rent free as long as I can, awaiting foreclosure, then go be a renter. Maybe buy something out of state like a home in Phoenix for $100K.
D. Rent now, work with the bank to settle this ASAP and get credit correction on track so I can be there in 5-10 years when things are back to normal.
You have some difficult decisions to make, however a short sale will not ding your credit rating like a foreclosure.
Have a look at this: http://www.youtube.com/user/george4title#p/u/0/LhltEVGa3iw
George talks about your concern: will inland suburb residents move coastal/city due to energy costs?
~Misstrial
Dasher:
You left out option E. Man up and pay for your condo. In 30 years you will own it free and clear.
On a more serious note I call liar liar pants on fire on you. Doctor of what? Tall tales. Professionals like doctors don’t come on a website and start spouting vulgarities. Doctors don’t build stable careers by moving to Phoenix to live in a $100,000. ranch house. Doctors don’t start out by saying they are working on a short sale with a clear price set, add that they intend to rent for years and then create a list of options on what to do. Oops forgot that this doctor runs a wild story about housing going sky high in certain neighborhoods on the west side. No rational well trained professional doctors study the facts, assess the situation and make a plan of treatment. Real tard trolls on the other hand….. I’m sure glad your not my surgeon… your not my surgeon are you?
Dasher-
If you are being offerred 70% from your (ideal) 750K asking price and seriously considering it, then it seems the market (you) has established some fair price discount.
Thus the 1 million place you mentioned should bite at a 700K offer… might have to wait for them to call you back in a few months, but they will.
I would not be so quick to repurchase the same asset class that has hurt you in the past. In trader’s psychology, that’s called chasing your losses. Usually turns into bigger losses.
Be glad your a doctor. At least you have a reliable income stream. Many are in a worse position, with little to fall back on income wise. Worst case scenario, you’re back in the game in 5 years.
That’s better than some people’s best case scenario.
Just my opinion though… best of luck.
Wait, how are you going to pull off (option B) another loan when you are trying to push through a short sale? Either they are going to see that you already have another property and you are trying to get a second, or your short sale will have gone through at which point you won’t be able to get a loan now. Also 100k isn’t enough down on the mid-tier starters at the prices you quoted. I’m curious why they are going to negotiate a short sale if it sounds like you can afford the payment. I’ve heard of walking away and mailing the keys in a foreclosure, but you’re trying to get the bank to go along with it through a short sale.
I think we are in for a different kind of inlation, inflation without the corresponding wage inflation for most workers. Gas prices, commodity prices, everyday prices are going up, but I don’t think the average incomes will rise equally. The wage inflation is happening in the countries that make the goods we buy China), and it’s going to cost us a lot more.
I don’t the housing prices in Santa Monica are sustainable. I know it’s been more resistant to price drops, it’s become the area of rich flight from falling home prices, but I think once the domino falls it’s going to be pulled down just like the other markets. It’s all relative, it will never be a cheap place to live, just not immune to price drops.
@Dasher: Hyperinflation is not a threat right now, nor will it be for quite a while. In spite of the massive QE, the monetary supply is still decreasing. That is deflation, pure and simple, in overall monetary terms. But it terms of prices, things are more complex, and we see it with housing prices going down, but food prices going up.
What needs to happen before you see real hyperinflation is that all of the excess malinvested credit and debt needs to be flushed out first. That is in the process of happening. After that’s done, you’ll see hyperinflation.
Eventually, those with long commutes will be driven to the cities; BUT the economic situation will be going down as well. Higher oil will lead to less economic activity, leading to lower demand for oil, leading to lower prices. Then the economy will rebound, oil will go up, and this cycle repeats. The bottom line is that it’s not going to be as linear as you are describing. In the meantime, people will have a hard time finding jobs.
The key thing though is that during deflation, you want to be out of debt, and preserving cash. Get out now while you can, and preserve your resources. This Spring is, IMO, your last best chance to get out.
Thanks for the replies.
I actually am a practicing MD. I graduated med school in 2003. Finished residency training and fellowship in 2007. Back in 2005, while still a resident, I bought a condo with my girlfriend at the time. We are joint titled and both on the loan. We did a 7/1 with 10% down , 6.9% PITI is about $5800/mo all in, then there is a mortgage interest deduction savings to subtract from that cost. Rent would gross about $3K/mo. on our unit. So I am renting from the bank and paying almost double the market rate while earning no equity whatsoever. It was a bad move…
I am able to get a new loan with my condo still on the books becuase I have a good income and (at least for now) have excellent credit. (lucky me! I guess 4 years of college, 4 years of medschool, and 5 years of specialty training was worth it. Now I am years behind my friends who went into law, banking etc. and get sued royally if anything goes wrong. But I do provide quality healthcare and am well paid for it)
The loan will come from a bank that is making private portfolio loans to doctors, up to $1M with 5% down fixed 5.3%. BBVA Compass bank
As far as cursing, well I am pretty upset. I bought this place becuase I was naive, buying with a girlfriend was a bad idea. I saw my co-residents who were 3 years ahead of me buy condos in 2001, and sell in 2004 making huge gains. They made hundreds of thousands. “Luckily” becuase there were interest only stated income option arms avaialble, I could get a place even when my income was low as a resident. I didn’t want to get priced out and every 2 years or less the prices were doubling in LA, and I saw “Easy money” to make while paying my dues as a resident. It seemed like a good investment. The Marina would never lose value. Yeah, right.
SO why not just “man up”? The 4 financial advisors Ive spoken too have said that in my situation Id be crazy to keep paying. I am interest only for another few years, then it converts. the poperty is $250K underwater. So my “strategy” has been to work with the lender to try to get them to modify the loan. Not forgive any principal, just modify to current rates and become amortizing now. I like the place and would stay there. My now ex-girlfriend would sell out her half, but getting her to understand that its so far underwater that her walking away now means she has to Pay Me her half of the loss is hard. She thinks I should pay her if I want her half of the property….
So, my understanding is that as soon as I start skipping payments, the bank will notice and become more likely to accept a modification or short sale.
If I’ve bought something else first, or accepted being a renter for 5-7 years then I would just mail the keys. I’ve no intention of squatting there.
And to reply to wydeeyed again, The ‘Phoenix for $100K’ is not a career move, it would be an investment property (before my credit tanks) in a market already destroyed by the bubble, vs where I want to live, that has not yet crashed (SaMo, PP).
As far as disgnosis and plans, I’ve been stewing on this since 2007, when this fall out began. I should have sold then, but thought that MDR was a safe investment, immune… ha! now we are so far under that it makes no sense financially to hold on unless the bank will make the loan payments closer to the cost to rent. They already got 5 years of interest only payments from me…
And as far as teacher salaries go…. Private school teachers are probably at least as talented as public school, generally get paid less , correct? And also have way less benefits. So the unions have wokred out a pretty sweet deal for them. I think unions probably do this in evey sector , not just teachers. In the days of early industry, workers were abused, unions had a role, now they are a cancer. Labor laws will protect workers. ACLU will sue if anybody gets hurt feelings in the workplace, and an owner should be able to fire an incompetent employee.
I’ve worked in hospitals with unionized nurses (Cedars, County LA) and several without unions. There is an absolutely crystal clear difference in the quality of care in general. f course there are good nurses and bad nurses everywhere, but when unionized, it is nearly impossible to fire lousy people. Luckily, I think that eduication has a lto more to do with parental expectations and environment than the teachers per se. Can’t say the same about health care.
Stop bashing teachers and go watch your Glenn Beck show and listen to your Rush Limbaugh bullsh**.
Amen. Some rat butts want American children taught by the village idiot. The median wage for carpenter is $25.80/hr. No overtime and no second job, that’s about $53,650/ yr. And they whine that teachers, who have to go to college usually with student loans, have a median salary of $60,000/ yr. Generally speaking, we pay the people that we trust with our children’s education about 7 grand more than we pay the people that remodel our houses.
American workers, including teachers, are paid too little. We’ve had wage stagnation for 30 years. People have borrowed against their houses to keep the standard of living their parents had. The investor class millionaires and billionaires have taken home more and more of the nations income. If Americans can’t borrow and they can’t get decent wages, they can’t buy, they can’t consume. In an economy that is based on 70% consumption that’s a real problem.
Wake up. Schoolkids are already being taught by the village idiots. Unions sell themselves as a way to grab more pay for less work, not to gain 10 more IQ points.
People should be posting MEDIAN teacher salaries, not AVERAGE salaries which are greatly weighted higher by admin/senior staff salaries… just my .02
Notice teachers salaries are posted on district websites and admins are not. I have taught 16 years, 12 on contract and am in the highest paid catagory due to my MS. I am SPED so I have 3 post B. years (7 total not counting the continuing education units I must still do) and an MS. I make 63k and my district pays 13k of my benefits. My HR director makes 130k the Superintendent 160k they have the same benefits. There are 8 admins in the 90-120 range. The school is a high school serving 3000. Frankly I dont think I am overpaid . I love my job but it is hard and getting harder. My daughter wanted to be a teacher but we convinced her to be a Speech Path. 75 dollars an hour an way less BS. I think you will see very few good people go into education now due to the way society has devalued us. My hourly rate is 35 by the way. I have 16 SH kids with 1-2 aides which is barely safe due to cuts. No admins have been cut since the start of this. I have a nice life style as I bought in 1998 a little starter house and could never afford to move up so my mortgage is 1300. However I raised 6 kids in 1000 square feet (before you judgemental types on here go crazy with that two were foster children) The problem is there are 11 districts in our town of under 50k people and there are too many administrators period. Too much overhead. Our grand jury said it would save the community millions if they consolidated but that means the boards voting to do so and they collect health benefits while they serve so good luck with that. How many other communities have the same problem?
By the way, a good rule of thumb in factoring benefits and taxes for a non-governmental employee, is 30%. When you factor benefits and taxes for a public employee (I know, I have gone through actuarial assessments for CalPers, so I am not blowing it up your skirt) is 70% to 100%.
Everyone also does not factor in the fact that teachers only work 9 months out of the year. They also receive 4 weeks (on average) of vacation time on top of this. Who on this blog receives this generous benefit?
Aww… poor little Ki. Still trying to blow smoke up people’s butts. Software engineers in good ol’ Silicon Valley: Base salary usually between $80K-$120K per year. Annual bonus in stock options and cash alone will be more than 30% of base salary and that excludes 401K, medical, dental, etc. And, let’s see what other work condition benefits there are. How about telecommuting from home. When’s the last time a teacher got to telecommute to teach a class. What about project time lines and due dates. Focus is on getting your part of the project done. You get your part done by week 3 of a 4 month project, you get some free time. Of course, when others get their parts done, you have to come back to the ether table to put your part with the others.
Care to try again. Or would you prefer comparing apples to oranges. How about that good ol’ tow truck driver making a median $42,250 a year. Let’s see what you’re not counting. Well, taking the truck home, errands and having gas as a business expense. How about a few “under the table” tows for cash. Always nice when you get a few favors from the auto shops on the car repairs. Tell me, how does all that play into your nice little 30%? Tell ya what… I agree that if you compare a teacher to a tow truck driver (even with the real world unreported benefits that teachers can’t get away with), the teacher comes out ahead most of the time. And, if you compare a teacher to a burger flipper at McDonald’s, the teacher comes out ahead.
20 years of Human Resources experience? How can you have that much experience and still be so clueless as to what it is to compare apples to apples and oranges to oranges.
How can you people say teachers are overpaid?
Bill Gates is worth billions. Carlos Slim is worth billions. Heck, even Angelo Mozillo is worth hundreds of millions.
And you bloggers say teachers making a paltry $100,000 are rich? We put our 9 months a year in teaching your rugrats how to count on their fingers. You want them to be able to multiply and divide? Then you’d better pay us at least $200,000 a year.
So, while the Rockefellers and Duponts are cruising the mediterranean in their yachts all summer think of the poor teacher that can only afford to take their sailboats up and down the California coast. When the billionaires are spendint the winters at Chamonix, teachers have to suffer through their two week christmas (and easter) vacations in tiny two bedroom ski-in ski-out condos at Tahoe or Mammoth.
All we teachers are asking for is a little respect, and a lot more money.
@Poor Butthead (Oops, I mean Poor Teacher): From EDD in CA.
1) Minimum wage in CA is $8/hr, which equates to $16,640 a year.
2) Median annual wage for Auto Mechanic: $39,400.
3) Median annual wage for Tow Truck Driver: $42,250.
4) Median annual wage for Pipelayer: $51,350.
5) Median annual wage for Carpenter: $53,650.
6) Median annual wage for Electrician: $54,600.
7) Median annual wage for Elementary School Teacher: $60,000.
8) Median annual wage for Middle School Teacher: $61,250.
That is some good comedy right there!! A carrer teaching kids tends to attract those who cant compete in the real world with adults. By adult I dont mean only responsible mature adults, I also include the deviant, selfish ones too, the ones the wimps are scarred of.
carEer AND scaRed
Dasher-
Get something else, then mail the keys.
Its the girlfriend who will end up screwing you the most. This way, you cleanly sever financial ties with her.
From your situation and your (admittedly short) description of her, she sounds like the type that sees MD after your last name, and her eyes turn into dollar signs.
Also, check out the related blog: http://www.DoctorHousingGoldDiggingMoocher.com
Hope the sex was phenominal…. now run like hell.
Joe Average, it appears you are the one confused. read my post again and read your response and then come back again.
Dasher—spot on about the fact that a strong teacher is just one factor that contributes to strong students. The lack of strong parenting and poverty are two of the HUGEST factors no one wants to talk about, because voters like to blame the other guy without taking accountability for their own questionable parenting. Politicians want to claim “education is broken”, so they can come in and promise to “fix it”. Read some Diane Ravitch to learn more about the topics and get back to me before spouting off the sound bites from the political parties and the pundits. Kids learn about 50% in school and 50% out of school. If you’re only going to give that kid 10% out of school, that kid’s gonna’ be a D in life no matter how hard the schools try.
But, my sister’s a teacher, and I can tell you that in her district in the OC, she has to pay 50% of her benefits, and her “pension” is just basically like a matched 401K. I think you guys are getting firefighters/cops and such mixed up with teachers. They’re the ones who do the “double dipping” thing in their last 5 years—look it up if you’re not sure what I mean and retire at 55. No one I know (as a teacher) could afford to retire until 60-62, and that’s if they’ve had about 40 years on the job with no health benefits until medicare kicks in at 65. Some districts like LAUSD are too dang big and poorly managed, and I don’t think the unions are representing teachers very well overall, quite frankly, but they’re also keeping districts kicking teachers out every 3-4 years in order to save money. Admin. have the tools to kick teachers out during the first 2 years (long probationary period don’t you think?) for any reason whatsoever. After that, it just means they have to follow a set process that can take up to a year. If admin’s dropping the ball, that’s their problem, not the unions—although, not a huge fan of unions overall, they def. have their place in the public sector, but they need to stop acting as their own entities and start getting parents involved and create parenting programs. Most schools I know of have already laid off 10-20% of teachers at each site (this has been going on for the past 4 years), so each year, there’s more and more. Teachers with 10 years of experience, 7 years of college and graduate schooling, etc…are the new “newbies” on the chopping block. I really wouldn’t worry about teachers. Whether you all like them or not, unless you believe you taught yourself everything you ever learned, you probably wouldn’t be typing this message if it weren’t for them.
Private school teachers often have husbands/wives who make enough money for them to be able to live off of a mere 25K-30K a year in this state. Private school teachers also do not need a credential which can take anywhere from 2-3 extra semesters upon univ. graduation. Otherwise, try living off of 25K after working a rushed schedule all day long with kids, then going home to grade, prep and enter grades…not to mention all the meetings and paperwork for accreditation forced upon teachers by admin. If you want your neighborhood construction worker (not knocking them!) teaching other people around you and your future kids, then pay them the little you think they’re worth to society. But, you’ll be hard-pressed to find any other professional willing to settle for that little.
Anyway, I know some people have an anti-union agenda and arrogantly think they’re far above educators (again, these people were self-taught prodigies), but don’t knock it till you try it. I see what my sis. puts up with, and I’m really happy that I stuck with being a CPA instead. (not loving this time of the year though).
That being said, I’m only 28 and know very few people in my age category who can truly “afford” a decent home around here. The OC just sucks anyway you look at it. People who say it’ll rebound anytime soon are idiots. Rates will go up, but I sure as hell hope it’ll automatically bring the home prices down so as not to have to wait till double digits come our way like in the 80s.
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