Foreclosure properties moving through the belly of the banking python – Notice of defaults decline while properties scheduled for auction jump. 2011 will see a jump in visible bank owned properties making it to the public. Agoura Hills and Woodland Hills real estate examples.
Over the last few months I’ve received more e-mails from readers highlighting properties that have adjusted in price significantly to the downside. To be more specific, the examples of quality properties facing major price corrections are growing larger. Now this isn’t a revelation but what it does tell me about the thousands of readers interested in real estate and who just happen to cross this blog is that many are willing and able to buy at the right price. Patience now seems to be a virtue. The California economy has taken a toll on more working class counties. California is a microcosm of the US economy. You have pockets of markets completely oblivious to the crumbling walls in the economy while most housing areas are struggling to stay afloat. More people are taking a critical eye when purchasing real estate and tighter lending standards have forced many into real estate withdrawal. To quote Jerry Maguire, “show me the money!â€
It is fascinating how we went from a belief that no shadow inventory existed to suddenly shadow inventory being a carefully managed policy from the banking sector. We’ll chalk that up to creative propaganda. As banks have shored up their capital through investment banking and other forms of speculation courtesy of taxpayer bailouts, many banks now seem more willing to leak out the troubled real estate onto the market. Let us take a look at Southern California distressed properties over the last six months:
Now this is an interesting view of things and this is only showing data from filings. As we know, many banks don’t even file for people missing payments (at least not early on). First, you will notice that from August to November notice of defaults spiked as many of the government modification programs failed. From November to January notice of defaults tumbled largely due to the paperwork fiasco that hit the banking industry. As the NODs filter through the process, you see the decent size spike in scheduled auctions. 71,449 homes in Southern California are sitting eagerly in the auction pipeline gearing up to become REOs for public consumption. In other words, the shadow inventory is ready to enter the market in 2011.
Now some have been asking why banks are more willing to filter out troubled properties with lower prices. I think the simple answer has to do with the government creating a three year buffer for banks to gather their breath, speculate in global stock markets (which have recovered) and now banks are more able to filter out distressed properties because of their recent profits (and taxpayer handouts). Most of the too big to fail banks have turned solid profits through their investment banking arms so leaking out REOs isn’t such a big deal anymore. There is money to be made elsewhere.
For example, take a look at this Woodland Hills home:
6222 FALLBROOK AVE, Woodland Hills, CA 91367
Bedrooms:Â Â Â Â Â Â Â Â Â 3
Bathrooms:Â Â Â Â Â Â Â 2
Sqft:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 1,481
Here is the sales history on the above home:
09/01/1995:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $160,000
03/10/2005:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $530,000
The above home is a REO property. So what is the current list price?
Price Reduced: 01/07/11 — $399,900 to $379,900
Now is this a good price? Still seems high given current market conditions but we are seeing more decent homes in mid-tier neighborhoods going for a lot less. This home from 2004 to 2009 wouldn’t have cracked the $300,000 barrier if it were listed by a willing seller. More and more areas are breaching these kinds of thresholds. Of course you will notice that this is happening with the REOs and not sellers realizing that much of those bubble gains were purely illusions like street magic from David Blaine. Many sellers that don’t get out now are going to see a slow erosion of equity over the next year. How? Just look at the spike in scheduled auctions. Many of these will become REOs and bank owned properties are being priced to sell. Let us look at another example.
Beds:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 4
Baths:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 3
Square feet:Â Â Â Â Â Â 1,801
The above is a nice home in Agoura Hills. It is also bank owned. Let us look at the pricing history here:
Notice how the price isn’t moving up? Someone paid $629,000 for this home back in 2004, almost seven years ago. Today it is listed at $499,900. These are good areas of Los Angeles County and price cuts are occurring just like they are in Culver City for example.
The trend that seems to have started in fall of last year is the acceleration of price cuts and price reductions from bank owned properties. There seems to be more and more aggressive movement from banks here. Banks have all the above data and more and they realize how overvalued some of their REOs properties are. They also know other banks have the same junk. So now that they know the government will protect them no matter what and their capital base is healthier, they are trying to beat each other to punch by dumping properties before others do. Foreclosures sell for a discount. If banks realize auctions are rising and the economy isn’t getting better, maybe today is the best time to unload.
What we do know is 2011 is not going to be a pleasant year for California real estate. Many of you already can sense this but banks know this firsthand. Any other examples of significant price cuts on REO properties?
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53 Responses to “Foreclosure properties moving through the belly of the banking python – Notice of defaults decline while properties scheduled for auction jump. 2011 will see a jump in visible bank owned properties making it to the public. Agoura Hills and Woodland Hills real estate examples.”
Note today LATimes classifieds 25 homes apparently bank owned in “LA” for sale as a lot, asking $5.5Mil for all 25. About $200k each (locations unknown). What’s up with this? If I owned stock in that bank I’d say they are
a. lazy,
b. trying to cut losses – expecting further declines in 2011,
c. throwing a bone to a friend,
d. saved ’em up to take tax advantages in 2011/losses look better on the books this year,
e. other.
I’m gonna go with (c), the “friend” being a hedge fund owned/run by the directors of the bank, and significantly capitalized by We Duh Taxpayers, GRRRrr. It greatly pisses me off.
I remember similar “block sales” going down in CO Springs during the S&L unraveling, circa 1989-90, and apparently blessed by the so-called RTC (Resolution Trust Corp.). In that pre-internet era it was harder for the little guy to police things in real time… this time we’ll be able to monitor it better, only to find out there are no “regulators” who give a damn.
“Many sellers that don’t get out now are going to see a slow erosion of equity over the next year.”
Remember the moronic RE agents and real-turds with the motto “buy now or be priced out forever”? Well, sellers/banks better SELL NOW OR BE PRICED IN FOREVER
2011 may be buying opportunities for the greedy. The banks are going to get the “little doggies” moving.
I watched this one sell in Studio City recently. It was listed for $315. Zillow posts that it sold for $270. A house in the Hills with a view. 3728 Berry Dr, Studio City, CA . The home looked like it needed TLC .
Single family home and condo asking prices in Los Angeles are declining at accelerated rates. housingtracker.net shows real time data of market conditions. In Los Angeles metro, the 25th percentile and median have dropped $10,000 in last 4 weeks. For the 75th percentile it has declined $20,000! It also shows month to month data. The data is updated every Monday. Also the number of listings have increased. The website also tracks nearly every Metro area, including Orange County.
I expect asking prices to decline dramatically as chasing the market down is getting old.
We were buying a short sale house in Chino Hills at 400K. It was finally approved by BoA after a one-month silence. But when we did a home inspection, we found there was too much trouble: roof leaks several spots, water damage, termites all over the garage, attic and front, dry rots, and mold. We will back out of this deal.
What agitates me is that the seller bought the house back in 2000 for 249K. Now they owe 428K for the first deed and 107 for the second deed (initiated in 2007), a Countrywide deal of course. They did not do anything to maintain or upgrade the house. The kitchen is in its original 1987 state. The roof leaks. They just smeared some paint over. Well, they own 2 Mercedes. The bank decided to forgive them for over 100K. There is a huge big difference between people who bought at the height of the market and people who took money out of their house and blew it through without putting anything back into the house. I think the latter should be punished. In this case, the bank should pursue the debt and re-possess their luxury vehicle and get some money back.
I’m not picking on you now, I just wonder why you would offer $400K for this place, seeing a Year 2000 sale price of $249K, even if it were in top condition?
Sounds to me like this house should sell for a “tear down” price in it’s current condition.
Be patient- L.A. prices are still too high and so are everyone else’s. You will find a much better deal.
Who is the primary employer in Chino area to support a $400K house price, the prison??
You don’t have to work in the town to live there. There are plenty of employers within a 20 mile radius that offer mid to high five figure incomes. With both partners working and a small down payment a $400,000.00 is quite affordable to a couple pulling down 125 – 150K.
Here is an example of a bank owned home that seems to be priced to sell. Not a great looking house but 2,100 square feet for under $400K is a cheap listing for this area.
http://www.redfin.com/CA/Long-Beach/4811-N-Bellflower-Blvd-90808/home/7559133
Sorry, this house is over priced by about $90,000. I have lived in the LBC since 1998. Bellflower Blvd is a MAJOR street plus this is not that “special” of an area even if the house was on a quiet side street. It is miles and miles from the water and a in sea of mediocre ranch homes.
Priced to sell?
I suspect you’re a shill that goes by the moniker “renter” only to *pose* as a true bubblehead. Probably a realtard.
Why do I say it’s not priced to sell?
Because it has a hodge-podge addition that gives it that 2100 sf and it’s on a major throughfare. Only a shill would say that at $396,000 that POS on a busy multi-lane boulevard is “priced to sell”.
EconE … you are somewhat paranoid. I am not a realtor trying to sell a house. I have lived in this area and was just putting up an example of a larger than usual home for the area below $400K which was unheard of not long ago. I am truly a renter sitting back watching prices drop before buying. Or maybe, I am a house painter hoping you will buy the house so I can get a job painting it. Or maybe I am a gardner looking for a job mowing yards and pulling weeds. Get a life dude.
Large house for something built back in 1950 but consider the cost for roof replacement, windows upgrade and heating cost. How well insulated is this home? etc. Going forward these larger older homes will experience higher maintenance cost and when viewed against a slower economy going forward folks need to be a bit more cautious as repairs and upgrades since these will probably be cash out of pocket as banks will be wary of HELOC in the future.
How much rent do you think this place can rent for?
You must be kidding right, just look at that curb appeal..LOL and it sits on a major blvd.
Shame on you…Why do realtor plug here?
At least its closer to employers than Chino!!
We could solve this mess over a few short years by bringing the factories home. It is time.The oligarchs have shown us that their way is greed driven and not in the best interests of the United States. The game is over , we need a to reinstate tariffs yesterday. BRING THE FACTORIES HOME !!!
My whole family worked around commercial fishing here in L.A., tens of thousands of jobs including the caneries and fleets. 1980 and the cowboy president comes along, dropped tariffs on imported can product, The fleets left then the Caneries, All those thousands of good paying jobs gone, just to consolidate the wealth that much more, pathetic.
Tariffs may or may not help. A really broad approach would cause an economic shock as you cause unemployment in shipping industry and ports.
In the long run I think it would help us working smucks but only in the very long run.
Really think a decent answer is revamp our tax code to try to reverse some of the capital flows.
Another fun policy move would be to attack north korea. Would help keep a nuke from slipping into the hands of someone bad and scuttle current trade agreements.
Ah. Someday’s it is fun being an evil warmonger.
A change in capital flows or increase in trade with China would be a major help. Looking at the recent headlines about the closing of the solar panel plant in Mass. Well, the government in China is subsidizing the heck out of the cost. Not sure we want to get into that business but it is also clearly inflating a bubble over there.
Do we really want to try to get into that kind of policy?
This is all an aside from housing though. Either way we will still have a massive oversupply. Kind of we need another baby boom for more favorable demographics. OK Ladies out there? 🙂
Favorable demographics? How about you guys marrying the woman you impregnate?
Result? Not so many abortions:
http://cnsnews.com/news/article/nearly-50-million-abortions-have-been-pe
~Misstrial
This whole start a war to juice your economy thing is a fallacy. We’ve had continuous war for nearly the last decade and the economy hasn’t done so hot. Munitions have a negative ROI! Spend money on a bomb. Use the bomb to destroy both the bomb and something else. Great.
http://economics.about.com/od/warandtheeconomy/a/warsandeconomy.htm
War can be good for the victor, especially if you destroy most of the world’s production capital, and get to be a partial monopoly for a while. However, unless we are contemplating global thermonuclear armageddon (everywhere except here), I sincerely doubt that the elimination of North Korea as a global economic force would do much of anything to anyone’s balance sheet, except of course the North Koreans. They get to add radioactive fallout, landmines and unexploded ordinance to their list of assets.
The current government loan programs with low down payments are still keeping prices elevated above trend, can’t imagine what the RE market pricing would look like with 20 per cent down as minimum. Watch out below!
Not sure why all the eagerness to catch the proverbial falling knife. Consider 1999 prices to be the high end of your range, to be paid only for pristine, turnkey props… otherwise you’re just being played by another bubble.
The second derivative is about to become very steep. Prices in most areas will drop so fast that it will take the banks/sellers 4 (or more) price cuts to attract even one valid bid!… and that bidder may well renege, lured by even steeper cuts across the street! That’s how things go when the “knee” of the curve is reached.
@Enzo Mimo
amen! unfortunately i tried to catch the “falling knife” in the bay area in 2008. i purchased a foreclosure for $235k less than the previous buyer. i found myself on a rollercoaster ride i wanted desperately to get off of, but i was ok while i had a good paying job in san francisco. all of that came to an end when my employer lost about 50% of their revenue in a matter of months and i was out of a job in early 2009. fortunately i was able to sell the home in only about a month for only $12.5k less than i paid for it (although with real estate commissions & closing costs, losses were closer to $48k). however i count myself lucky that the lesson didn’t cost me even more. the home’s value today it probably about $40k less than i sold it for, and the new owners, not me, are subject to the ups and downs (mostly downs) of the real estate market, and the government and bank manipulation that goes along with it. i may buy another home someday, but i will not be hoodwinked into this idea of “buy now or be priced out forever”. when housing is finally allowed to bottom out, it will stay there for years. i will wait for the bottom and then let it sit there for awhile. prices aren’t going up fast anywhere – not without the manipulation of another bubble.
The Agoura Hills zip 91301 has median income $88,725. Only 24% of families have income over $150K. This is a nice family home, but more middle class than upper middle, nothing special. The 1999 price of $275k was a reasonable valuation at about 3x median income for the area.
Now ask yourself. Was the California economy better in 1999 or now? In every way, California is MUCH worse off now than in 1999. So even the reduced price of $499k is a knife catcher price. In 2016, the next seller will be hoping to get $299k in greatly devalued dollars.
Spot on comment..
We are looking at the trees and watching them fall one at a time (thanks to this board).With QE3 just around the cornor, lets just look at the forest namely Japan and see 20 years of slow downward price action…We have a long, long, very long way to go..and that is if we are lucky and can manage our way out.
Median household income in LA County is around $42,000. Probably a bit more due to this being old data, but the point being that it’s closer to 50k than 80k.
The majority of households rent. So homeownership is mostly limited to those who are above the median income, by and large. Just do the math.
Sorry to be a cold towel, but you need to say it’s upper middle class. The lower reaches of the upper middle class, but still.
That first house brings back memories.
In the third or fourth grade, early 1960’s in Dallas, I remember a classroom assignment we had to create an exchange with a penpal. (:-) remember penpals?)
There was a big rolldown map of the US in the front of the classroom. Each of us had to find a town that appealed to us and then wangle a penpal there.
I remember studying the map carefully and finally choosing Fallbrook, California as my target penpal place. I remember thinking Fallbrook sounded beautifully green and large and happy and a place where penpals rode their bikes down shady lanes after school and played in drowsy creek bottoms on Saturdays. Fallbrook I thought, sounded like a town that must be paradise.
Then we researched local schools in our chosen towns and sent letters to the students. I got replies from the third grade there and set up a regular mail correspondence from a girl of my age in Fallbrook and we even exchanged pictures. That was almost 50 years ago now?
Funny the things one remembers from childhood. I still imagine my penpal in Fallbrook living in such a house as the one in the photo…..comfortable, sunny, warm, normal, inviting.
I wonder if my Fallbrook penpal remembers me?
I think the banks in Florida have also gotten the message. My brother has been trying unsuccessfully for over a year to get into a short sale or REO. He has not been overly specific on size and location; he just wants a place of his own after a recent break up. He has a sizable down payment saved up, and with his military retirement and current job, a pretty stable income. The banks just could not give him the time of day.
We crawled through several places that would be best served by a bulldozer. Other places looked good but had significant problems with A/C units broken or leaky roofs. (Both are major deal-breakers in hot/humid Florida.)
We had a place on our radar that is currently a money-losing rental. We inspected it back in November, but the bank just wouldn’t move on price.
All of a suddent when the calendar flipped to 2011, the banks have been ringing the phone off the hook. A couple places that he passed on are still on the market for a lower price, and the banks are willing to cut the price further for major repairs.
Well we looked at the rental again earlier this month, and after it passed inspection, the bank is just jumping through hoops in the hope that my brother can meet a January 31 closing. They are taking a siginificant hair cut, but they will be able to move a property off their books.
I have to believe that the banks, at least here in Florida, are under the impression that they cannot keep throwing their problems into the future, and might as well deal with the losses now.
You continually reference the “Banks” and their position on the shadow inventory and foreclosure process. The banks are ONLY SERVICERS for the MAJORITY of loans. 80-90% of the residential loans were sold to investors. What I am unclear on is the percentage that still remain in the coffers of those RMBS’s. The stock market views these investments in a very different light than the banks. In fact the banks make money servicing the loans… so they have little real concern if a property is sold or not… so long as they are working on a “file” (loan), they collect fees.
The investors may be less inclined to sell if they believe they will recover more of their investment in a year or two when they hope the economy will recover.
Further, many investors have employed lawyers to pour over the loan documents looking for fraud wherein they can compel the originating bank to pay them off and take back the loan. Additionally there is a portion of the loans that had mortgage insurance and they have yet another voting voice on sale or hold….
That is not true. Banks are the primary holders of the loans. That is why they are so insolvent and had to be rescued by the Fed’s. It is a lie and propaganda that investors bought these garbage loans worldwide. They were so greedy that they actually kept it themselves and that is why we have so many bank failures such as Washington Mutual, Countrywide, IndyMac, etc.
I have long been interested in having a vacation home in upstate New York. (This would be our first home as, although my wife and I are both attorneys, New York City real estate is over-over-over priced, but this is a hidden issue due to the piles of cash the finance firms shovel out to their employees every year, allowing them to keep the RE market alive. That being said, my zip code -11215- has a tremendous number of homes for sale, because sellers expect the gold-plated price and buyers are beginnign to realize that most of it is just chrome. But, I digress) Every few months I survey the properties for sale on Zillow, etc to see where the market is. When I did it last week I found what I always do – radical differnces in price per acre ($3500 to $20k), sellers dropping their prices behind the markets (that price cut of $50,000 would have helped last year, or the year before) and everything having been on the market for 300, 400 or 500 days. This time I found something unprecedented: a few brave properties, on the market for as long as everyone else, RAISED their prices!
Someone is dispencing the kool-aid, and many are drinking.
Let me take a moment and expound on soemthing here. My informal survey has taught me that
a) prices are too high across the board.
b) pricing is inconsistent
c) sellers aren’t facing reality, or are facing it in inconsistent ways (see B)
d) too many people have too much of a financial interest in cheerleading for the market, keeping C alive.
What does it all amount to? A schizophrenic market where true price discovery is impossible. Therefore, buyers have an interst in waiting-and-seeing.
Make me a reasonable offer and I’ll buy something today!!
Hang in there, Shala. There is no shortage of DSP (TM) – Delusional Seller Pricing, in any market in SoCal…desirable or otherwise!
I hope that one of the houses swallowed by The Python (the banking industry) is full of TNT and that it explodes while inside the python, splattering snake meat and guts everywhere. Lets face – the banking industry (cartel) in this country is a parasite. A parasite! These artificially high housing prices are caused by the banks and the government, and are designed to enrich the banksters and to push people into debt slavery.
Doctor, a faithful reader here. Do you have any insights on the rental market? I am currently looking for a bigger rental (3 bedrooms 2 bathrooms) in the Westside. Except for a couple of nice, well-priced places that rented quickly, most listings are overpriced and sit in the market for months. Some listings come up as rentals in one site, and For Sale in another site. On the other hand, there is not much supply of rentals (lots of 2 bedrooms, few 3 bedrooms). I can stay where I am right now for as long as I want, but if you really need to move into a rental you are stuck with one of the few overpriced units, or you have a bidding war for the one that’s fairly priced. Any ideas on how this mess is going to affect the rental market?
Westside properties are at 2004 levels, a nice 25% drop. From the beginning of 2003 to the end of 2004 was a huge run-up. We are at the beginning of that next big leg down in pricing. After the next 25% drop, people start getting washed out and we sink back to 1999-2000 pricing. Only then, when people are crying in the streets, would I venture back into the market. Ma be now the banksters will start unloading shadow inventory, now that their balance sheets are fat with tax-payer cash and their latest gambling schemes.
The Westside hasn’t seen anything yet.
http://www.westsideremeltdown.blogspot.com
http://www.santamonicameltdownthe90402.blogspot.com
Hey there westside,
I am just sick of waiting on the LA area. Been looking at areas like Woodland Hills for jobs. Looking at North San Diego… all over the place. A lot of military work around but figure none of it will last. Going to be a big haircut in military spending.
Lots of good jobs all over LA. Don’t expect as much contraction due to pressure around the westside hoods. You’ve got people that really want to be in Torrance/Hermosa and everything turns to poop for the next 15+miles inland. That and the bad drive down to OC. The other thing that makes the bubble last longer is prop13. So, you have dead uncle charlie still owning a property in manhattan beach.
Combination or beach, poor roads, government jobs (Boeing/NGC/Raytheon/Aerospace) along with stupidly high amounts of studio jobs.
I don’t see any drivers for new business growth there but as long as govt keeps raining money down on aerospace, I see the bubble continuing. More of dumping extreme amounts of money into the old, tired, barely needed military projects.
The area, for supposedly being elite, is awfully run down with poor quality housing. That and a certain amount of snobbery about being in one of the beach cities.
Honestly would prefer if they had good train service to the IE areas, OC or places inland. Sick of the crowding and would rather have a longer commute to a low crime/good schools area. They could really use a more extensive train system. I can drive to the beach on weekends when I feel like it.
I love your post, because you call it “for reals.”
Defense jobs (really war tech jobs) are government jobs. They’re really worse than government jobs because of project overruns and overbilling. But whatever. Why don’t people just say they’re government funded jobs?
Prop 13 really does keep people from selling. In fact, it encourages some absentee landlordism. But it’s like a 3rd rail of politics so it won’t be repealed. They need to change the annual increase from 2% up to 3% or something, and let taxes catch up to real prices.
I’d like rail to the inland too, but that is just very expensive. What might work better is to treat the rail like a freeway system – build it, and then zone around it to encourage job growth along the rail. (Forget about this condo-on-train-station nonsense. It’s better to live 3+ blocks from the station. Stack the jobs on top of the stations.)
LA is doing this, and the allegedly progressive (but really not anymore) LA Weekly lambasted the city for trying to sneak it past the locals who prize their R1 and R2 designations. It makes me want to tell them it’s just growing pains.
The higher the horse, the deeper the fall. Check SoCal prices versus “normal” parts of the country. There one can buy a ~1950 home with 1,7xx ft for $ 17,000 cash, spend $ 23,000 and rent it out for a stable $ 700. It is clear that something has got to give.
There need to be stable income to support present albeit declining prices. In a few months, The Doctor will be blogging about State IOUs. And then there is the unfunded pensions issue worth hundreds of billions.
Those with good nerves should observe this drama unfold. Will be interesting to see how much tax revenue is coming in for 2010. Then there will be an avalanche of property tax appeals, which in turn will hit the county revenue.
What is someone to do with $ 200 k life savings and equity? Stay in L.A., forever being in debt? Or move somewhere where he can get a SFH on a nice lot for $ 75 k, then spends $ 25 k on a remodel. Buy a new car and put $ 75 k in some REIT yielding 14%? Those who retire will surely cash in and move.
The new generation often lacks savings for a down payment. Henceforth I would hope the Doctor will analyze data of buyers. Who are they? Investors? People who love tax write offs which come with rentals? Which %age are foreigners?
Keep watching out for properties to resurface at half their former listing prices. Watch the same properties being listed for years and counting. Check some markets being in need of fresh new REOs. As banks cannot keep holding back the ever increasing shadow inventory.
imo, from what I’ve seen and heard:
Foreign money buying in Orange County, primarily from China and Asian countries where the dollar has fallen in value.
Canadian money buying in AZ and NV.
British money buying in SoCal and FL.
Some buyers are those who sold at the top of the market and who are buying in again.
Young adults are triple-whacked by student loan debt, high rents meaning a young adult CANNOT save much for a down because the landlord sucks it up (you wonder where socialism support comes from – its partly youthful anger against landlords), and unemployment.
~Misstrial
Don’t write off the middle aged. I know many who, like me, are between 25 and 45 who have not had a life resembling the baby boomers. For one, we’re more conservative about spending… and often with the frugality comes a sense of morality. So I see a lot of people going in for religion, but also for various forms of anarchism and communism. Some of the communism just comes from having to live in group housing situations for years and years. Some of it from years of working without decent benefits and relatively flat earnings.
The media like to focus on the Tea Party, but they’re old folks mostly. And the younger folks are into Ron Paul and all that, but when it comes to activism… there are a magnitude more people sympathetic to anarchists and leftists. The media just doesn’t want to show it.
Around 10 years ago, anarchists in Seattle made the news by rioting. But that was just some “idiots from Eugene”. The other anarchists there were in their late 20s to early 30s — not kids, but adults. The typical anarchist had a college degree, some business experience, some activist experience. A lot had some exposure to right wing suburban politics.
I never thought that any generation would have it worse than Generation X – seeing the public services cut by Reagan, then being ejected from college into a recession – but this new batch of kids has it worse. There ain’t no internet to rescue their futures. (And I thank the boomers and military industrial complex for the internet.) The internet ain’t about WiReD anymore. It’s about that wino Ted Williams on YouTube. That’s the future of the internet – human misery gone viral.
If the kids want revolution, I’ll help fund it with what little I have.
If they want to squat houses, I am willing to help.
If the market has destroyed you, let’s destroy the markets.
Mistrial you hit the nail right on the head. As part of the younger generation, I have experienced these things first hand – student loans, high rents and low, unsteady income for most of my adult life. I definitely cannot afford to save anything especially considering that rents have consistently taken up over 50% of my income. As a single person in LA, I was earning above the median income for a family and still had trouble making ends meet. When I first moved to LA after college, LA was affordable compared to other parts of the country – rents were cheap, gas was cheap, food prices were ok. Salaries were low but that was ok since I could (barely) afford everything I needed. 7 years later, salary was a little higher but rents up by 30%, gas crazy, food even crazier and tons of junk fees and taxes (9.5% internet connection tax in city of LA anyone) everywhere.
I think the unemployment rate in LA is something like 13%. I don’t ever remember LA being a great jobs town like SF or NYC sometimes are in good times. Even small businesses struggle because of the competition. I used to work in the entertainment industry and remember meeting the older generation of entertainment industry workers who lost their jobs due to studio consolidations, music industry decline, and runaway production. Those were solid middle class jobs that supported whole families. Same thing is happening again now as studios make fewer movies, production crews are barebones and even big stars are taking a hit. Sure, there are good jobs working for the studios but it takes 10-20 years of work before you see six figures unless you are somehow connected or got lucky.
I left a couple of years ago and now live in Europe. Seeing the situation from afar makes you realize what deep shit LA and the rest of CA is in. There are opportunities around the world but people must leave their focus on America behind to take advantage of them. It’s amazing how much of the world exists beyond the Sierra Nevadas.
LAer and jk2001 – thank you for posting. Its really sad that housing, a basic human need along with air, water, and food, became an “investment vehicle” with a focus on “positive cash-flo” and that in order to be “successful” a property seller had to “make a killing” in real estate.
imo, a lot, and I mean a lot of the unending price mark-ups in residential real estate were due to the millions of Boomer divorces (1970’s/1980’s) which accelerated housing turn-over along with price increases so that the cost of the divorce and future house downpayments for the sellers was factored into the home listing price.
imo, the folks that complain the loudest about socialism are the same ones who jacked up the cost of housing with their personal lifestyle and greed pattern.
On one message board I stated that I’m a renter (which I am) and that if 40 percent cuts in federal workers’ pay is in the national conversation, then that is OK with with AS LONG AS MY LANDLORD AND LANDLORDS IN MY LOCALE ARE WILLING TO REDUCE RENTS BY 40 PERCENT.
No one gave me any positive feedback for this post. None.
~Misstrial
Wow! Can you tell us what REIT gives at 14% YoY return? I would really would like to invest in that as well!
Banks decide they don’t have to follow mark to market accounting.
“Accounting rule makers took a key step Tuesday to reverse a proposal that would have required banks to value their loans based on the ups and downs of the market.
The Financial Accounting Standards Board agreed that companies could continue to carry a variety of financial assets and liabilities at amortized cost, an adjusted version of their original cost, as they do now. That would reverse a proposal the board introduced last May that would have required bank loans and other financial assets to be carried at “fair value,” based on market prices.”
http://online.wsj.com/article/SB10001424052748704013604576104012708309774.html?mod=WSJ_hpp_MIDDLTopStories#articleTabs%3Dcomments
Can someone more educated than I in finance & accounting tell us if this is really about parity with international corporations or just another bent knee to our financial overlords?
When in doubt, go for the overlord option.
And if you’re reading something in the WSJ and they are all for it, Overlord action is a dead-lock. They make a tried-and-true accounting principle sound capricious and scary. To wit, “… would have required banks to value their loans based on the ups and downs of the market.”
Back in 2008(?) the FASB re-wrote the accounting rules, at the behest of the banks & other overlords, so that they could stop “marking-to-market.” This was a time when no one wanted to touch any RE investment, and so the banks claimed they were incapable to finding the true market value of the assets they held. Or, in other words, they didn’t like what the market was telling them, namely, that their investments were worth a lot less than they wanted them to be worth.
Banks were able to keep assets at inflated prices on their books, and these same over-inflated values were used as collateral for 0% government bailout funds.
Apparently some sane-minded person at the FASB decided it was time to change, but was shouted down by their peers.
Alas.
California and Az. Bank of America squatters will enjoy this piece. Didn’t B of A buy Countrywide…oh yea…I think they did…
http://www.zerohedge.com/article/bank-america-stops-issuing-notices-default-non-judicial-states
i live in northern ca (marin county)
i need to move and the rentals are even more expensive than before.
what gives?
Property “owners” mortgage loans are resetting.
If a landlord/property owner has been prudent, they should not have to raise rents in this economy.
Another thing – believe it or not, many were dumb enough to heloc their *rental* property during the real estate run-up. Those loans must be paid back as well.
Latest reset chart from Credit Suisse:
http://bayarearealestatetrends.com/2010/03/new-credit-suisse-recast-chart
~Misstrial
Could be. However, I think the 2012 cliff on that chart is for the last of the 2007 opt-ARMs. That being the case, opt-ARMs reset this year and next are for four and five year old mortgages. No expert here, but I thought these things commonly had maximum negative amortization clauses on them that would otherwise trigger early resets when you hit some limit. So if you are still not reset on a 4-5 year old opt-ARM, you’ve probably been paying something closer to the real cost of the loan all this time, which is to say catastrophe notwithstanding you probably can actually afford your mortgage. Such folks might even see a rate decrease due to lower interest rates these days.
Does that seem right?
Doc, another great story! Has any one else seen the commercials KB Homes has been running on local channels promoting the new projects they are starting all over Southern California? What’s up with this? These new developements will swell the inventorty even more making it harder on seller’s to get out of their “Under Water” mortgages… Does KB Homes really believe that their “Cookie Cutter” homes on tiny lots will sell? What do you all think?
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