patrick.net

1)move into a one room appartment.
2)rent your big home for whatever you can rent it for, month to month.
3)stop making payments, save every dime you can from rent payments
4)when the bank contacts you after 1 year or so, you can negotiate a short-sale or cash-for-keys.
5)you walk away with a huge pile of CASH when the bank finally moves, or they renogotiate your loan and you make easy payments.

And then, you can go straight to hell. Take a few REwhores with you.

sybrib says

wannabees on the fringes in places like RiverMark

LOL. Right in the sweet spot between Milpitas, Alviso, the garbage dumps, and the airport.

As for inflation, we need to see wage inflation for housing to reverse its decline.

2006 prices were predicated on banks willing to lend to people who could not pay the full amortization, were outright lying about their incomes (effectively altering debt-to-income limits in their favor), and/or were actually not even paying the full interest on the loan!
Buyers were playing in a market that was looking for the greater fool, and the game's music was going to stop!

All the lenders giving out money on these terms are no longer with us. To put 2006 into perspective, mortgage debt was $8.2T in 2004, $9.3T in 2005, $10.3T in 2006, and $11T at the end of 2007. It is $10.8T as of Q309. We're not going to see 2006-era pricing until the lenders are pushing out a trillion a year in new loans and HELOCs, and/or Walmart is paying $25/hr.

... edit: and/or effective mortgage rates go down to ~2%, like they are in Japan.

thomas.wong89 says

OK inflation goes up, what then?

(1) automatic wage increase in an area that doesnt have ‘bargining agreements’ thus landlords can’t increase rents.

(2) cost inflation absorption by employers, who then adjust costs by reducing wages/salary in order to stay cash flow positive.

(3) pull back on non-housing spending by consumers sending GDP lower and employers readjusting salary spending due to lack of sales demand by consumers.
What does your crystal ball say about these things?

hmmm...let me check. wait..wait....bzzz bzzz..

(1) does not compute.
(2) I see your wages are lagging the general price level increasebut that's ok. People only pay attention to nominal wages anyway.
(3) you will get your 3% raise and rush out to buy that new TV at Best Buy.

The market is not coming back for 30 years..........that is how long it took the last time we had a crash of this magnitude.

Why do I say that......?

Simple.........it takes that long for the new crop of naive greater fools to be born and raised with the mantra that "real esate never goes down in value"...........

They won't believe the rest of us who are still around with our memories of this period, because we'll just be retired old farts by then who's opinions won't count for squat. Trust me.........

toothfairy, your crystal ball maybe tells something, but you're seeing it with realtor's eye. At least, that's what every realtor says. Or, did you forget to clean the dirt off the ball?

Anyway, when income decreases, rent should decrease in theory so that people can take it. In reality, landlords are greedy bastards and the renters are cheap bastards. Landlords always win as long as there's plenty of renters out there. Legal or not, landlords can choose to raise rent and let more people live. Only two people appeared at signing table, right? They in fact are doing that. I start to see 10 people living like cockroaches in 2 bed apartment.

In terms of wage, the wife found her salary went up a little, you know its whole new year. But the actual number on the paycheck is gone down slightly due to the increased health care cost and witholding rate. We're getting less money, while landlord is demanding more for the rent. I am sure some of you find yourself in the same shoes.

I don't see that as a good sign though, you can call it any way you want.

wong-

Do you really think that wages will decrease in a period of inflation?? If so, then you need to check out that class at DeAnza....

"Do you really think that wages will decrease in a period of inflation?? "
That is quite possible. It's called a decrease in the standard of living.
Commodities (food, energy, materials, etc.) are traded globally, so if demand from China, India or wherever goes up so will the price regardless of YOUR ability to pay for it.
With unemployment persistently high companies have little to no incentive to increase wages. You don't like it? Fine, there're 100 people who want your job and even take a 10% pay cut. Oh, let's not forget rising taxes to pay for the government's recent spending/bailout spree.
I think this is the most likely outcome going forward. The above scenario will lead to a significant decrease in purchasing power of the American worker/consumer. Since most people don't have a choice but to keep spending on food and energy, the savings will come elsewhere. Housing will be one of the main areas where people are forced to cut back. People will move in with relatives, move into smaller places etc. This will exert pressure on prices for decades to come. At minimum it will prevent real estate prices from rising faster than inflation. So a return to inflation adjusted price levels of 2005/06 will not happen in this lifetime.
Other areas where people will make cut backs are vacations, cars, electronics, anything that falls under "consumer discretionary".
If you're under water in your house it might be worth taking a serious look at walking away depending on debt levels, location, employment, local rents, local laws (recourse vs. non-recourse) etc.

der_mupf says

That is quite possible. It’s called a decrease in the standard of living.

It's also called stagflation, and yes it is possible. It's just highly unlikely. The US is still the largest market in the world--if the US goes into recession, it will be very hard for demand in China to go up enough to keep commodities trading higher.

tatupu70 says

der_mupf says

That is quite possible. It’s called a decrease in the standard of living.

It’s also called stagflation, and yes it is possible. It’s just highly unlikely. The US is still the largest market in the world–if the US goes into recession, it will be very hard for demand in China to go up enough to keep commodities trading higher.

Maybe, maybe not. China is buying all the commodities it can get it's hands on right now. Lots of it is in US dollars. They have a lot dollars to get rid of, enough to continue stockpiling through a pretty good US recession.

Thomas--

Not sure exactly what your point is from that last post. You're very focused on silicon valley--I understand that you live and work there, but there is a whole wide world out there. Different sectors of the economy will grow and shrink over time depending on how well they compete with their rivals. It sounds like your particular area may be experiencing some tough competition from overseas right now which is putting some strain on profits and salaries.

But I wasn't talking solely about silicon valley or the semiconductor industry.... It was more of a big picture statement.

not that it matters, but the earlier Mustangs were built on existing platforms with 90% existing parts.
The new ones are sitting on Mustang-only platforms that were made from clean slates, with some extra cost coming from gov mandates for safety testing and destruction of parts to test failure points.
I think the base models in both cases could be afforded by the worker that built them, or the local policeman, so the cost vs wage may be pretty flat. (?) Free market worked well before gov input into the new car market, in my opinion. Now it is messed up.

I think the high-tech price is driven down by free-market forces.

Lets not be confused or fooled by the high salaries in the bay area being based upon talent. They are based upon the affordabiltity of housing. If employees can not afford to live there, employers have to pay higher in order to establish and maintain a workforce.

Bottom line is the housing crisis and high cost of living in the bay area was caused by greed and profit. It has grown to unsustainable proportions and will drop back down into an honest range.

To get back on target with "Should I walkaway...?"

Do what is right for you and your family. It comes a point when you are so far underwater you have no choice but to walk away. Why put good money after bad money. Home prices will continue to drop regardless of what those with a conflict of interest (realtors-sellers-owners in the area) try to tell you. The same crash that took place in Merced, Brentwood, Moutain House, Manteca, Tracy is moving East.

More and more owners who purchased in or after 2006 in Dublin, San Ramon, Windemere, Danville, Alamo, Pleasanton, are realizing the continuous decline in the market (-20%) in 2009 alone, and walking away.

In addition there is a hidden inventory of distressed and foreclosed homes and ARMS and interest only loans that will devestate the market in 2010.

Sellers, Buyers, Landlords, and Renters Beware- major price adjustments are coming to East Bay.

G says

Sellers, Buyers, Landlords, and Renters Beware- major price adjustments are coming to the entire Bay Area.

I fixed that for ya :)

thomas.wong89 says

SV is a giant Walmart vendor.

No it's not. Hardware and software exist in synergy. Software is creating wealth -- services that increase current productivity, educate, or provide entertainment -- out of nothing but 5V to the ICs and 12V or whatever to the LCD panel.

The value-add of a programmer is immense. I didn't understand the economic underpinnings very well back in '82 when I first got into PCs but I now find the subject fascinating.

Tens if not hundreds of millions of people would spend the bulk of their life playing WOW. Just look at us arguing on this stupid message board.

SV has been the central locus of the R&D of this wealth engine, and has been receiving its fair share of the wealth streams this innovation has been throwing off, back to the 1960s with Fairchild et al.

tatupu70 says

Do you really think that wages will decrease in a period of inflation??

It all depends if you can go to your boss with a request for a raise and walk out of his office with your job still.

We'll get a wage-price spiral if & when Walmart unionizes. Not gunna hold my breath on that one.

We'll see if Walmart can play hardball or not. The only card they hold for their employees are the bennies, and if there's national health care that cuts the balls off that.

sybrib says

Moneypitt,
As far as that goes, buying a home in the Bay Area in 2006 with the intention of moving out of it in five years is a speculation, too. So many people like Randy H. and Patrick himself were warning folks on this website not do such speculation in 2006.

Statistically, people move on the average of once every 5 years, this of course includes renters too, not just home owners. I don't think of planning to move in 5 years is a sign that your a speculator. The Mortgage type wasn't a wise decision, that alone would qualify you as a speculator in my book, but not 5 years. I believe we will tend to find this number increasing in the coming decade. Sure lots of people are losing there houses to foreclosure, but once this shakes out I think you'll find the people who are left, that can afford to make there payments will tend to stay longer at once place based on real estate being flat, if not underwater for years to come.

I think he is a foreign student or worker that is happened to live in US for specific period of time.

If you're in that position, you shouldn't have bought expensive house, and you were not eligible for ARM. But you bought it, and they gave you the loan. Yeah, that's not even legit though, visa holders did that for decades because RE is always a good source of money. Misfortune this time, isn't it?

Now you're thinking about walk away, and worrying about it to be another mistake at the same time... you have to choose one whether you like it or not. I don't feel for you like I feel for other people who's in trouble.

If you're greencard or citizenship holder, what I wrote above does not apply to you, but the sitiation is the same.

Anyway, people here already told you some ways for you to recoup the demage. Bap33's advise is particulary practical, IMO.

thomas.wong89 says

tatupu70 says

wong-
Do you really think that wages will decrease in a period of inflation?? If so, then you need to check out that class at DeAnza….

WOW! you forget we have a deflationary economy in the Bay Area because of tech. Do you know of any industry which cuts its prices to compete. At least the Automakers increased prices over the decades due to the sligthtest inflation. A Ford Mustand back in ‘66 went from $2500 to $20K today. Todays cars are bigger better and faster. A Tech company cuts its prices over the years. A PC went from $10,000-$15,000 20 years ago down to under $500 and 10x better regardless that commodity prices have skyrocketed.
As a result we have cut salaries on the aggragate to compete. Can you name a similar industry where there raw materials went up while the producer has consistently cut sales prices which resulted in lowering salary costs. And as a result all their component vendors (HW+SW) have equally forced to reduce costs.
So what do you think about those $300 Netbooks. Far cry from the $10,000-15,000 PCs from decades ago.
My god man? do you even understand where you living.. SV is a giant Walmart vendor.
If you actually worked in SV as a numbers guy/gal it would be no new news to you.

Although you make a valid point there the price of technology has gone down, while speed has dramatically increased, I never remember PC's costing 10 to 15k. The highest price I can recall was $4,000 for a top of the line loaded system.

TechGromit says

Although you make a valid point there the price of technology has gone down, while speed has dramatically increased, I never remember PC’s costing 10 to 15k. The highest price I can recall was $4,000 for a top of the line loaded system.

As I sit here typing away on my $8,000 computer... (16GB RAM, 3.4GHz dual 64bit processor, 1.5GB video card, etc).

Regarding the original question, if you are "fleeing the country" then it probably isn't a huge deal for you to foreclose, short sell, walk away, whatever. Keep your credit cards paid off, make sure your credit is as good as it can be and keep it there for everything but this housing issue. So many people are in the same boat, that the credit score companies will probably have to come up with an asterisk or special symbol to attach to credit scores indicating that the person had a foreclosure/short sale at the height of the crisis, but it otherwise a good credit risk. I'd consult an attorney before making any irrevocable decisions though.

The only way prices are going back up to 2006 levels any time soon is if we get Zimbabwean-level inflation. And if that happens, people are going to have more problems on their plate than buying a house, so your non-liquid "asset" really is only good as shelter. And if you aren't going to be around the country to take advantage of that shelter, then dump it. You sure don't want to become a landlord from the distance of another country.

Whether there is wage increase or not. Whether there is inflation or not. Whether there is deflation or not. One thing is for sure that standard of living will go down. The last 30 years of borrowed wealth from future is just haunting the economy right now. This has to correct itself. None of the remedies will work. Just watch the horror. Don't buy a real estate now or don't get heavily involved in stock market. Banks will eventually come begging money from common mass to increase their capital.

Buyers beware 2010 in California will be worse than 2009. Values decreased 20% in 2009 ands is expected to get worse in 2010, do you really want to buy right now?

dadab,

Ex-actly. Does it really matter?

You say tomayto, I say tomaw-to,
You say potatoe, I say potawt-to

You say deflation, I say inflation

Tomayto, tomaw-to; deflation, inflation.

Let's call the whole thing (our std of living) OFF!

(-as in, OFF a cliff).

Yawn.

I don't think you can base a politician's performanace on one year's numbers. If you did, one could say Bush was doing a good job based on Employment figures, low number of bank failures, etc. Any politician can cut taxes, create jobs and deregulate the stock market and claim success. Only to have crushing debt, massive job loses and a crashing stock market occur when the next guy takes office and blame it on him. There's a lead time with any policy change a politician makes, the market didn't collapse overnight when it was deregulated, it was even considered a stroke of genius for a time. Most likely any policy change that Obama makes will not be fully felt until he's out of office, weather it's in 3 more years or 7 years.

thomas.wong89 says

As you may know Apple nearly died off due to their high priced products compared to the other corporate vendors.

The reality was a bit more complex than that. Until Windows 95, an x86 PC was largely a pile of unusable crap as far as business automation was concerned. I was in the trenches with this so refutation is impossible.

Apple's 1MB Mac Plus and the follow-on Mac II in 1987 were machines 6-10 years ahead of the usability offered by the Wintel solution, and Apple at the time was willing to over-price this increased utility -- charging what its customer base was willing to pay for the vastly superior productivity offered by the Macintosh platform. I paid $6000 for a Mac IIcx + 13" RGB monitor and it was the best $6000 investment I've ever made (I took it on the plane with me to Japan in 1992 where it supported my english-teaching business through 1995).

Apple successfully widened its platform offerings with more consumer Macs (the LC etc) in the early 90s but Microsoft with WFWG and NT 3.1 was beginning to get its GUI act together.

Apple facilitated its fall by rather retarded management and lack of strategic control over its own operations. It could not forecast demand at all, building too few consumer machines in 1993 and too many in 1994, each occasion leaving billion dollar holes in its balance sheet as it had to dispose of excess inventory in one year and face an inability to meet overwhelming customer demand for the new Power Macs of 1994-96.

With Windows 95 OSR2, PCI PnP, the 440BX AGP platform, and the P133/Pentium Pro, Wintel had become "good enough" such that Apple's value relative proposition was limited to extreme fortress niches like photo manipulation and graphic design.

AFAICT without the web providing platform-neutral utility in the late 90s, Apple would have run out of gas entirely as it tried to bring a replacement to the increasingly decrepit classic Mac OS to market.

"I'm looking for attention
Not another question
Should you stay or should you go?
Well, if you don't have the answer
Why are you still standin' here?
Hey, hey, hey, hey
Just walk away
Just walk away
Just walk away"

Kelly Clarkson - Walk Away

.TechGromit says

one could say Bush was doing a good job based on Employment figures, low number of bank failures, etc.

Techie, you forgot to mention that GW's good job was accomplished while he was on vacation a full 35% of his presidency - his nickname is (was) "the vacation president."

http://www.dailykos.com/story/2009/5/31/132827/535

"Of course, President Obama's brief escape to New York is a reminder of the breakneck pace and long days of his White House. It also serves a stark contrast to the "barely working" George W. Bush, the man Dan Froomkin aptly named "The Vacation President."

As it turns out, Bush easily eclipsed Ronald Reagan's previous record for presidential sloth. By March 2008, Bush had spent all or part of 879 days at his Crawford, Texas ranch or at Camp David, surpassing Reagan's mark of 866. By the time he left office, George W. Bush had made 149 trips to and spent 487 days at Camp David, with another 77 getaways to (and 490 days at) Crawford. Toss in 11 visits and 43 days at his folks' compound in Kennebunkport, Maine and President Bush spent 1020 days - 35% of his presidency - getting away from the White House.

And it's what President Bush missed during his down time that is all the more disturbing still. For example:

•During his month-long August 2001 Crawford vacation spent agonizing over stem cell research, the CIA briefed Bush on the its now legendary pre-9/11 PDB, "Bin Laden Determined to Strike in U.S.' Bush's response? "All right. You've covered your ass, now."
•As Hurricane Katrina devastated New Orleans and the Gulf Coast, Bush nevertheless decided to continue his vacation. As New Orleans was inundated, Bush strummed a guitar with country singer Mark Wills and shared a birthday cake with John McCain on an Arizona airport tarmac. While Bush eventually cut short his trip, the damage to the nation - and his presidency - was done.
•As Israel and Hezbollah went to war in southern Lebanon in July 2006, President Bush managed to stay in Washington. But as the carnage escalated, Bush used the time in the office to welcome the finalists of American Idol to the White House."

If you go to the county records office (assuming you know the county) you should be able to search the tax rolls for his name.

a government for the people by the people... good phrase.

When talking about people, It used to mean ordinary people, then middle class, then become a kind of middle class that owns multi million mensions and pile load of money.

Yeah, US just evolved to normal country like the rest of the world.
But you know, we all knew that so far, right?

Nomograph says

You have to drill down a bit deeper to find the true legal basis of the decision.

This is kinda naive I think. The basis is driven by the decision, not vice versa. Bush v. Gore for the explicit admission of this.

Ima to the point now where this decision is a good thing. If the teapartiers can organize a bigger mouth than the progressive left as evidenced over the first year of Obama, then great. The only thing that attaches me here is my Mom's house, and I can give that to my sister if need be. If only Canada weren't so far goddamn north.

I'm not THAT pessimistic. $50 x 50 million donations is TWO POINT FIVE BILLION.

If you can't get elected to national office with $2.5B, something is wrong with you.

Tenouncetrout says

Kattie Couric publicly gunning Palin down, and that SNL bitch injecting her proposed comedy.

Are you kidding? Asking someone what newspapers they read now qualifies as gunning someone down?? What world to you live in?

Tenouncetrout says

just by controlling the majority of the media in this country.

the press, being capital, has always been owned by the wealthy. Just sayin'.

The "liberal press" is a myth that only credulous retards, lacking any ability of independent thought, swallow.

He who pays the piper calls the tune.

Granted NPR does have an inherent tendency to swing left, and has to consciously counteract that. Plus of course the more educated one is the more liberal (anti-creationist, pro-choice, anti-military, pro-labor, anti-capitalist, pro-homosexual) one becomes, so there is that disconnect between media professionals and the sea of miseducated dumbassery of the hoi polloi.

You do know how insanely silly the new CPSIA (or whatever the acronym is) product safety law is right? You have local DAs/Feds openly stating they WILL go after folks selling stuff at bloody garage sales for pete's sake if they don't get stuff led tested. Books older than the 80s have to be led tested? Old clothes? It just killed smalle business and used/2nd hand stores. But hey, we have to think of the children... all because some assholes in China screwed up.

tatupu70 says

Tenouncetrout says

Kattie Couric publicly gunning Palin down, and that SNL bitch injecting her proposed comedy.

Are you kidding? Asking someone what newspapers they read now qualifies as gunning someone down?? What world to you live in?

Really, tot? Katie Couric conducted an interview with a politico who, if elected, could potentially be the leader of our country. The interview was willingly given, and you can bet your sweet ass that Palin prepared for that puppy. That Katie Couric hammered her with questions - per her job - and Palin fell far short of being able to appropriately answer, simply made it fun to watch.

and is there any difference between Tina Fey portraying Sarah Palin and Chevy Chase skewering Gerald Ford? Or, for that matter, a misc member of the SNL Cast playing a political figure? Perhaps in your mind there is, but in my mind all's fair in politics and comedy. They're interchangeable.

elliemae says

Really, tot? Katie Couric conducted an interview with a politico who, if elected, could potentially be the leader of our country. The interview was willingly given, and you can bet your sweet ass that Palin prepared for that puppy. That Katie Couric hammered her with questions - per her job - and Palin fell far short of being able to appropriately answer, simply made it fun to watch.
and is there any difference between Tina Fey portraying Sarah Palin and Chevy Chase skewering Gerald Ford? Or, for that matter, a misc member of the SNL Cast playing a political figure? Perhaps in your mind there is, but in my mind all’s fair in politics and comedy. They’re interchangeable.

>

Did Katie Couric use the same approach when dealing with the Dem. party candidate?

Questions thrown at Obama were similar to throws in a batting practice. It was done for the entertainment of the audience and to make him look good. Now that the real game is on, he has been stricking out regularly.

nosf41 says

Questions thrown at Obama were similar to throws in a batting practice. It was done for the entertainment of the audience and to make him look good.

Again--what am I missing? How is "what magazines do you read" a difficult question? Not sure how the media could dumb it down any further than that. Should Katie have asked Palin her name and then stopped there? Would that have been "friendly" enough for you?

Nomograph says

nosf41 says

Now that the real game is on, he has been stricking out regularly.

He’s only striking out because they didn’t have baseball when he was a kid in Kenya, or wherever it is you insist he grew up.

Since you started the topic - this is one of the several troubling issues that the major media outlets ignored. The eligibility question never came up in his interviews. Why not? Bush was hounded by the same media for trivial issues compared to the eligibility for presidency.

To this day no proof has been presented to the public that Obama was born in the Kapiolani hospital.

Couric didn't gun down Palin. She asked simple questions and Palin was too stupid to even be able to answer those. When she tried answering the question about the bailout, same result. Btw...she was pro bailout. The woman was clueless and when John McCain selected her, he pretty much verified everyone's concerns about him. The main is old an senile. Obama is just a clueless on economics. But at least he was smart enough to get someone to prime him on Keynesianism 101 before he went out and opened his mouth.