patrick.net

StuckinBA,

Great article from the OCC. Of all the regulatory agencies these guys have been the closest thing to a consumer advocate to date. Also not surprising to note that the only group that had any objections to a tightening of lending standards was the NAR! Safe Haven always has "da goods". Thanks.

George,

Good point. Is this the last hurrah for FB's and GF's? The other aspect that is going to plague the lending industry is that as DTI skyrockets many of their clients will no longer be approved for "slam dunk" HELOC's etc. Or certainly at the low rates they've been touting in the past. So no more re-financing your way out of a painted corner!

MA,

Doesn't surprise me at all. There CAN be legitimate reasons for tapping into one's 401K. Because your home "equity" is exhausted and you need to further fund your "lifestyle" isn't one of them. Perhaps these are some of the "lost men" SFWoman warned us about? To be sure most are still very gainfully employed and are slipping down to HR during their break to "fast track" their loans.

Now we're seeing the "other" side of the housing boom. Instead of the home that keeps giving and giving (Housing ATM Machine/Equity Liberator) what we now find is the home that keeps draining and leaking! An "alligator" if you will. Rather than a constant and unending source of liquidity they now require regular feeding.

June Phillips,

I spent a large portion of my adulthood overseas. Trust me, no one would have liked to sit this debacle out more than me. You're sick and tired? Ahem, you have been graciously spared having house rich homedebtors (people that are deluded enough to believe they actually own the home, not the bank) rub their HELOC funded lifestyles in your nose at every opportunity.

There is ample evidence that the long awaited crash is now in full swing. Please feel free to go through the archives and watch as housing "perma-bulls" have vacated and are now very much on the defensive. Also visit the many other housing bubble sites that will absolutely overwhelm you with data from coast to coast. Read, research and enjoy. If you would like please feel free to "buy now before you are priced out forever" but do so at your own risk. Smart money has long since taken their profits and like many here are waiting eagerly on the sidelines.

MA,

Good question. The truth is that seldom if ever are these loans repaid and the "extractor" gets a 1099 at the end of the year heralding the arrival of income they will be additionally taxed on. (On top of 10% early withdrawal penalty). More times than not the individual does not have the liquidity come the 14th of April so the elect not to file. Chalk up one more entrant either to the "underground economy" or a newly minted member of the "The IRS is F'ing with Me" club!

astrid said:

One interpretation is that the concept of the market is an unstable concept that tried to fill in when human society evolved beyond kinship groups. After that, our altruistic impulses and our selfishness just got all confused. (DS ought to like this idea, since it would support going back to a noble savage like existence)

DS said:

oh yes, love it. i was reflecting on this just yesterday by a coincidence — really truly. we live in an atomised, depersonalised society, where we see other people as instrumentalities, as things who will provide us with something, where we get caught up in endless acquisition and systems of status markers… i think i was trying to understand why there is constant saturation advertising everywhere and salespeople exist…

Hmmm. Let me think about this notion. A "market" is somehow a contrived, artificial concoction; markets wouldn't exist "naturally" except but for all this human greed and consumption. The extension is that in the "pre-market" dawn of human civilization people lived some kind of gentle, noble utopian existence.

The second idea is so preposterous it need not be countered thoughtfully. Archaeological evidence is to the contrary. Early human societies -- at least any you might label "pre-markets" -- were marked by short, and often intensely violent lifespans. I posit that anyone today prognosticating about the virtues of ancient existences would not survive themselves in such an environment for more than 2 weeks.

The first idea is just a misunderstanding of what a "market" is. Markets exist whenever there are more than one person competing for the same scarce resource. Many primate species exhibit distinct market making behaviors. There are also aspects of market making that occur in organized collective hive insect colonies.

June Phillips,

Beleive me, no one understands the need, the primal drive to re-immerse yourself in your native culture more than me. Of the 9 years I spent in the Navy almost 7 consecutive years were spent in S.E Asia. Let me further assure you that the "good ole U.S.A" as you might have remembered it is either gone or severely altered (depending on the length of your hiatus).

You see here in Amerika we are no longer required to have gainful employment. We simply purchase a primary residence with no money down and make "interest only payments", wait a few months and then extraxt the hard earned equity to fund our lifestyles! After a few years we further extract equity to buy second, vacation and "investment" homes which further facilitate our equity extraction livlihoods. We no longer make any thing here. We just make our livings selling houses to each other. Welcome to the United States of Real Estate!

June Phillips,

Having bought in 2003 or even 2001 is NO guarantee we won't revisit those price levels again! When this is all said and done perhaps only those that purchased in the 90's and DIDN'T re-fi and take equity out can start "break dancing" with joy! Here at patrick.net we love to talk about reversion to the mean. Wages and salaries have actually declined in real terms and we're in uncharted waters in terms of any traditional relationship with affordability. The housing data is pouring in on us from all quarters and we can barely keep up with the negative reports. Depending on where you live you may have missed your window to walk outta here with "big fat stacks". If you don't believe me, call your realtor and tell them you want to list TODAY and "really test the market"! The reception may not be as warm as you're anticipating. Inventory is starting to pile up. (Yes even in the BA)!

George,

Oh and I still owe you for the use of your now patented phrase, "If the seller ain't cryin' I ain't buyin' btw, just last night my wife and I were trying to wrap our minds around something that may seem a little bizarre.

Is there a way to which you are aware to calculate the number of "Wasted Days and Wasted Nights"? A Freddy Fender classic to be sure but what we were trying to calculate is the number of never occupied (or empty flipper homes) multiplied by the number of "wasted days" they continue to go empty? I mean just think of it! What an incredible waste of resources. What an incredible waste of "utility". Just having all those empty homes out there, plus the interest meter (that's always running) boggles the mind. Maybe we're looking at the future of "time shares"?

tsusiat,

I move for a second as inclusion into the glossary!

God you bust me up!

Like a lot of military jargon it's bound to get perverted down the line like:

The United States of Shitty Realtors (or something like that) but the original will always be yours sir! Oh, btw do any out there know the meaning of "FUBIJAR"? We all know what "BOHICA" stands for right?

"FUBAR"?

If we're going to watch this crash in "real time" these are going to be terms all would do well to familiarize themselves with!

George,

Absolutely! In fact I'm half hoping they keep the "neg am" around just long enough (for those with deserving FICO's) to take advantage of it! That or put together a "vulture fund" to work it in a bigger way. (We're already talking about how best to structure that as we speak). Because we're anticipating plenty of short term cap gains it may make sense to do that in a "self directed" IRA where we can even get our hands on some tax liens etc. without having to pay cap gains. Think of it as going in "after the battle" to bayonet the wounded? Sick, I know but someone's gotta do it!

Is it a buyers’ market in Detroit?

It's a giveaway market in Detroit.

I miss Marina Prime…and the tirades he’d get from Surfer-X.

Should we un-ban him? :-P

This might be new topic material, but curious on people’s thoughts — other than the weather and proximity to Stanford/Berkeley, what prevents the Bay Area from becoming Detroit one day (technology being commoditized and sent to the south or India, state’s brutal fiscal situation prohibiting upward mobility, etc)?

Stanford alone is sufficient to keep it alive for a long time. You can feel the good feng shui just walking in the campus. I think the luck of the Bay Area is still there.

June Phillips,

I'm a little curious about your motives for buying. You said, "I had the opportunity to buy before I took on this oversea assignment in 2001, and again when I came back for a visit in 2003, but I didn’t."

Does this mean if you had bought back in 2001/03, you would still have gone overseas anyway? If so, then your primary reason for buying would have been expected price appreciation, no? Doesn't this make you a speculator by definition?

Not to trying to be a jerk here, just trying to point out that what's been driving the market for the past several years has been this severely warped "new paradigm" that your PRIMARY HOME has transmogrified from being mere SHELTER for your family to sure-fire "INVE$TMENT".

Personally, I would like housing to go back to being "just" shelter. I would also prefer to live in a place where my ability to purchase said shelter on a common man's salary does not depend upon laser-precise market timing of that rare "window of opportunity", which only seems to come around once every 15 years.

Fuck California and it's once-in-15 Golden Wonka Bar Housing Lotteries. If it is not willing to adopt housing, immigration and tax policies that enable working class people to provide adequate shelter themselves, then it deserves to go down the toilet.

-to provide adequate shelter themselves
+to provide adequate shelter for themselves

I am now leaning a bit closer to hard landing again.

Welcome back, Peter P. Perhaps you will earn back your old title of "Darth Bubblehead" ;-) .

funny, George & I posted almost the same thing simultaneously.

If this guy is right, it won't be until 2014 that it will be a buyer's market:

http://www.oftwominds.com/blog.html

Maybe we could have some fun with him???
Of course he did have that special way of p!ssing us off!
What is the consensus?

I have nothing against him. Moreover, no troll can harm us anymore at this point.

Fwiw, here is a graph of the median income in Santa Clara from 2000-2004:

http://www.kidsdata.org/topictrends.jsp?t=31&i=1&ra=3_132

If this guy is right, it won’t be until 2014 that it will be a buyer’s market:

Booms and busts are not symmetrical though, because greed and fear work differently. The Elliott Wave theory may offer some insight?

Lift the ban. He won't come back anyway. He's probably begging to get his investment banker junior analyst job back now that he realizes you actually have to work for income; and usually very hard for high income.

Fwiw, here is a graph of the median income in Santa Clara from 2000-2004:

Is that per household or per capita?

Lift the ban.

Let's take at least 5 more votes.

It wasn't really my intent to get snippy with June Phillips. It's just that with all of the "horror stories" just now coming to light I get a little edgy when someone comes across as "having regret" and "had I listened to you guys I wouldn't have the big fat stacks" etc. etc.

As much as it pains me to admit it, we are in August. Summer seems to be passing with frightful haste. For Oregonians, we can almost start the countdown to drudgery from here. I will try to keep in mind that as hard as it may be for me to say good-bye to the summer how much more difficult it must be for prospective sellers (and FB's) as we enter "the Dead Zone". Rather than rejoice in the fall colors it will be a time of desperation, defeat and last ditch efforts to find someone that will do a generous appraisal to tap the old HELOC one last time to carry them into the spring selling season of 2007. No such worries here.

Booms and busts are not symmetrical though, because greed and fear work differently. The Elliott Wave theory may offer some insight?

I don't know about Elliott Wave; a bit astrological biorhythmic for my tastes. But the same effect is explained by the risk/reward fear/greed curve (ala Thaler)...

In generally people place 2 time or more value on avoiding pain/fear than they do on reaping reward/gains. For big risky things that they perceive will affect their future profoundly -- like major surgery or a house buy/sell -- they put way more than 2X value on avoiding pain & fear.

It's this psychology that keeps me uncertain about the viability of a soft landing, even though many fundamentals point that direction. Once people start experiencing perceived losses they can start to move much more quickly than most would expect.

Randy,

"The second idea is so preposterous it need not be countered thoughtfully. Archaeological evidence is to the contrary. Early human societies — at least any you might label “pre-markets” — were marked by short, and often intensely violent lifespans. I posit that anyone today prognosticating about the virtues of ancient existences would not survive themselves in such an environment for more than 2 weeks."

That's why I don't actually support putting the market genie back in the bottle. It's impossible and most attempts to take away the market has backfired spectacularly. We can't go back to a universe with a couple million hunter gatherers and stone tools.

However, we do seem to have impulses that are hardwired from those hunter gatherer days (your example of people's Communist/Capitalist duality) rather than market driven impulses.

So currently we have:

Randy, LILLL, SFWoman, ME

who favor un-banning MP.

Anyone with a different opinion?

Peter P,

I assume since there's a market for illegal bear gall bladders (and probably bear pe nises), bear paws will also be available. Fortunately, I never get invited to those kinds of parties so I don't know for sure.

The bulls just don’t come out to play much anymore…

True. Where is Face Reality?

Fortunately, I never get invited to those kinds of parties so I don’t know for sure.

Me neither. I will have duck webs instead then. :(

I'd rather the MP ban stay in place. He was incredibly distracting while he was here and he didn't offer much in the way of information - just a lot of boasting about his alleged lifestyle.

I agree with un-banning Mr. Prime. If he does wish to post here again, it will be interesting to hear his take on the changes in the market over the past few months.

I don't know who Marina Prime is. But if you need 5th vote, I will give mine. Unban him. Is it worth going over the archives ?

I miss the bulls. Like the one who said he made money in Vegas and now investing in Idaho.

They will come back. Wait for next spring season. The seasonal uptick can start a dead cat bounce, esp in BA. (But if the lending standards actually change, it's hard to envision even that.)

So folks who believe this is just a temporary glitch will come back to taunt us in April 07. I am looking forward to it.

Sure, whatever. Let MP back in the show. (I could use a laugh). What concerns me more though is Surfer X's absence! Maybe if we invite one we could get the other?

Or how about having a cameo appearance "guest RE perma-bull" to use as a pinata?

Personally, I don't see how MP ever brough anything of value to the debates here --unlike Face Reality or Fake P. Mostly, he just ignored whatever anyone else said and spewed the same old crap, spamming up the board and annoying everyone.

I vote "no".

New thread: FuckedCounty.com “dead pool” revisted