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The Galindo Mystery


               
2007 Mar 8, 9:14am   23,862 views  221 comments

by HARM   follow (0)  

Most of the posts here tend to pretty much revolve around posting housing/economic news stats, debunking REIC propaganda, ranting about the NAR/Fed, sharing stories, parodying ignorant FBs, etc. This time, I have a genuine mystery for you to help solve.

A recent San Francisco Chronicle article, "ECONOMIC DEEP FREEZE
January cold spell inflicts hardship on the state's citrus workers" contained the following excerpt:

Ruben Galindo, 44, Castanon's neighbor and a LoBue worker for 15 years, said, "Whatever little savings that we have, we are just not spending any. We are saving our pennies and nickels just to get us through the year.''

Galindo, with a wife and three kids, also has a mortgage and thinks he can handle two months of unemployment, but no more than that. He bought his house in Lindsay in 1995 and has thought about moving to El Paso, Texas, where housing costs are lower.

"But when prices of homes here go down, I won't be able to sell,'' Galindo said. "And they're already starting to come down.''

Ok, now here are the facts:

  • Galindo bought his house in 1995, so that's 12 years of (presumably continuous) mortgage payments, at a much, much lower cost-basis than today
  • Galindo was a LoBue worker for (again, presumably continuous) 15 years

    • Yet...

  • Galindo has very little savings, in fact no more than two month's worth
  • Galindo cannot afford to sell if/when house prices here come down

    • I really need your help here, because I just can't seem to reconcile the first two statements with the last two. From 1995 to 2007, house prices throughout virtually every part of California have at least tripled. So, even assuming Mr. Galindo took out an interest-only loan back in 1995 (not likely, as they were very rare back then), he must have at least 66.67% equity in his home by now, right? And if he has been more-or-less continuously employed since 1992 (with a very, very low housing cost basis), then how could he have almost zero savings? Even with the wife + 3 kids and assuming his job is of the low-skill/low-pay fruit-picking variety, and that his wife never works, this all seems somewhat hard to understand.

    Has Mr. Galindo cash-out refinanced his house each year since 1995 and used the money to take his family on annual round-the-world luxury cruises? Has his family dined exclusively on Chateaubriand, Maine lobster, pâté de foie gras, Italian black truffles, Kobe beef and Dom Perignon for the last 12 years? Is he single-handedly putting "Kitty", "Amber" and "Bambi" at the local gentleman's club through college?

    Unfortunately, this mystery is beyond my limited amateur-sleuth abilities to solve. Please help me out here.
    Thanks,
    HARM

    #housing

    Comments 1 - 6 of 221       Last »     Search these comments

    1   HARM   @   2007 Mar 8, 9:16am  

    Sorry about the double-post --I didn't see Patrick's new thread until after the fact.

    2   Malcolm   @   2007 Mar 8, 9:33am  

    Yup, he has obviously blown his cash out refi. What an idiot. I love these losers who omit crucial facts like that from their hardship stories.

    3   HARM   @   2007 Mar 8, 9:45am  

    Muggy,

    Very reasonable explanation, but...
    ...if Galindo had made any actual improvements to the house, wouldn't he be able to recoup at least some of that investment when he sold the house?

    I think this might be a case for the Hardly Boys!

    4   sfvulture   @   2007 Mar 8, 10:03am  

    The SF Chronicle knows that the majority of their readers don't have the sense or curiousity to run the numbers of a 1995 mortgage as HARM did.

    They also know that the majority of their readers think that capitalism and free markets are the problem with government control of every aspect of life being the solution. Galindo's situation is a prime example of the evil fruit of capitalism. It is meant to evoke sympathy and look to the nanny-state for answers. Of course, Galindo bears no personal responsibility here.

    I am of the opinion that this and a number of sympathy stories like this are to set the stage for a tax-payer bail out.

    For the bleeding hearts reading this and thinking that I'm a cold bastard, let me share with you that in the late 80s in another state, I purchased a home where the developer had lowered the interest to inflate the price. I later sold the home at 50% of my purchase price. I've been there and it's not fun. However, I signed the mortgage and had responsibility to repay it.

    5   Malcolm   @   2007 Mar 8, 10:33am  

    SFvulture, I sympathize with you, and I respect you. I am sick and tired of people paying things back when it works for them. In the end keeping your word and paying your bills is what really seperates out people of character. People love the idea of sticking it to someone else, or a bank, and they just can't grasp that it is only a short term boost, and they have shot themselves in the foot for the rest of their life when they do. I don't even need to ask, because I can tell that you pulled yourself back up.

    6   Malcolm   @   2007 Mar 8, 10:37am  

    And related to the story, why oh why do these people keep having kids they can't afford?

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