patrick.net

SP,

Yah... I know the idea is laughable. But wouldn't it be nice? If a Mid-level worker made a gaffe that caused a company to have to rebuy 8 billion in loans, you can bet he wouldn't be walking away with a boatload of cash.

PAR said:
Great timing EBGuy. I posted a Shiller quote a few days ago. He was asked when a market typically crashes and he said that it’s right about the moment that the local press starts running stories that embarrass people (e.g. Florida swamp sales in 1920s). This morning there was one in the Merc and now one in SF Gate… The ball is rolling.

I will try to remember this story (about the bridge loans) in six months and see if we can get the author to do a follow-up article. I doubt the "bridgers" will be so forthcoming.

Looks like rent or buy is beginning to hit the MSM; maybe this will help temper fortress SF. BTW, the A.(nswer) is everytihing one could hope for.
Rent or buy -- timing is everything
Q: It always amazes me when people reflexively say that buying a home is better financially than renting. Is this a fundamental law of physics? I currently rent a house for $2,100 a month, and to buy a similar house in my neighborhood would double my expenses.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/03/11/BUG08OI8UT1.DTL

All the while I have been sitting on the sidelines (many years now), this has been my single greatest fear. We are no longer a country with personal responsibility or accountability.

Today, everything is someone else's fault and it is the government's responsibility to provide a "safety net". All these people who were flipping properties and making money considered themselves to be geniuses. Now that things are no longer looking up, they would like other people's tax money to be used to bail them out.

This is atrocious. People who take risks should pay if they took bad risks. If they don't, the next time a bubble comes around there will be more speculation not less.

Does anybody think the LA wildfire is prophetic in any way?

Does anybody think the LA wildfire is prophetic in any way?

I dunno, but i just read more about the Citrus Freeze recently. I had no idea that we taxpayers helped bailout those impacted by the freeze. Including helping pay mortgages of workers who lost their jobs from the freeze.

Siriam,
This country hasn't valued personal responsibility and accountability for a very long time now. From the S+L bailout, to the LTCM bailout, fiscal responsibility hasn't seen the light of day for decades now. I could take a cheap shot and argue that this all started when the Boomers "took power" in government, but I won't...
:twisted:

eburbed :

Do you have a link ? Was the bailout part of some standard farmers' subsidy or was it an entirely new pool of money diverted from the taxes ?

This putative "citrus bailout" doesn't come close to being the worst case of government bailouts. How about the constant flood of money (pun intended) to people who insist on rebuilding in hurricaine or flood territory after a natural disaster has wiped out these homes? Should the government continue to encourage development in high risk areas? I guess if we extend that argument, though, no one should be living in the Bay Area unless they are in a building able to withstand a magnitude 8+ earthquake?

And this bailout will happen while the money pit of Iraq War is getting deeper and deeper...
I think there will be a bailout but am equally curious how the politicians can spin this one. More importantly how willing American public is to turn a blind eye on the imminent financial obligations like Social Security, Medicare and Iraq War as long as their home equity is growing.

skibum,

For the most part I'll agree, there's nothing new here about dodging responsibility, however we do have a double standard. One is reserved for big business/government and..... we have a completely different standard for small business and private individuals.

Look how long we've kept AT&T on life support!

skibum and Sriram :

The market/economy will offer enough punishments for the FBs. Even those who won't lose their homes will suffer due to lower standard of living.

As far people like Greenspan et al, there won't be any problem. There might be a book blaming all on him, but nothing more. Some mortgage company officials will get punished - IFF there were SEC violations etc. I doubt if anyone would get in trouble for liar loans.

I am worried about the USD as well. But I am a small small fish. The banks and rich investor who have far more political clout also have far more USD exposure. It's tempting to blog that USD will be worthless, but most powerful folks in every part of the world cannot afford it to be worthless. So it will devalue, but against what ? Very few alternatives, hence I do not see much devaluation.

That's why I am puzzled about the bailout. As has been pointed out except the GSEs and banks, anyone else will have a tough time getting bailed out.

Do you have a link ? Was the bailout part of some standard farmers’ subsidy or was it an entirely new pool of money diverted from the taxes ?

http://www.centralvalleybusinesstimes.com/stories/001/?ID=4530

Victims of the mid-January freeze that devastated the citrus industry in the Central Valley may be able to get financial help to pay their rent or mortgages.

The state has allocated up to $2 million for the aid.

As many as 12,500 citrus workers have lost or soon will loose their jobs because of the freeze, which caused nearly $1 billion damage to the crop, much of which was still on the trees when the icy temperatures hit.

Overall, agricultural damage is estimated at $1.3 billion.

The Department of Housing and Community Development says grants under its “HOME” fund program will be available in increments of up to $250,000 per jurisdiction to eight counties and 79 cities on a first-come, first-served basis.

I have mixed feelings about this. I really do. I can see why the government (e.g. taxpayers) should help, but I can also see why we shouldn't.

I'd be a horrible politician.

DinOR,

The obvious answer is that big business and a few other select sectors like agriculture are deeply intertwined with government in the form of lobby money, perceived constituencies, and all that usual government corruption crap. Small businesses and private individuals have little say or influence in this "representative" government of ours.

I'll see your AT&T example and raise you with corn/grain subsidies to the farming industry, the utter lack of expected return to the government for FCC licensing, and, how about the entire airline industry!

As has been pointed out except the GSEs and banks, anyone else will have a tough time getting bailed out.

Apparently you haven't heard about Prop 13B: Save Californian Homeowners. On the ballot for this year.

Son of Prop 13 reads: "To protect Californian Homeowners, and their children, effective 1/1/2006 (retroactive) those who rent in California will be required to pay a 5% transient fee. This revenue will go help guarantee that every home sold in California will break even or profit. Prop 13B satisfies the equal protection clause of the Constitution by protecting homeowners from the damages caused by selfish renters who do not contribute to their local communities by buying real estate."

Wow, I just read the WSJ article, the entire front page plus about 80% of page three of the Journal Report. It reads as though DinOR or HARM wrote it. Where is MarinaPrime now?

eburbed,

SHHHHH! Don't give them ideas! Seriously, I could see that getting actual support and hitting the ballots!

Why should the banks get bailed out? Will that not encourage banks to continue having loose lending policies? After all, if the loans start to default the gummint will bail them out! If not, profit!

My take: there should be no bailout to no one.

During the .com boom/bust, anyone who bought the stocks of JDSU or the likes... and did not sell quick enough is still showing it as a loss in their tax return. Did the Fed change the upper limit on capital loss $3000??? No. I remember some of the discount brokers had a request in to George W to revise this upper limit.

lucky seller pockets, FB loses.

Sriram,

There's a big difference between a bailout that keeps them from going under and an infinate 'get out of debt free' card. It's painfully obvious right now that the retard loans they were handing out aren't going to be profitable again for quite some time, so even if they get bailed out, they won't be making those loans if those loans won't make them money. And even after they're bailed out, they're going to have significantly less cash and credit to toss around.

a_friend_of_patrick,

I rest my case. Thanks. Oh and btw, during the tech wreck we tried to get CPA groups etc. to lead the charge as "the number" hadn't been updated since the 70's! I mean what does it take to step on a 3k land mine? Older (and more aggressive) investors may not LIVE long enough to carry forward their losses but now we're going to bend over backwards b/c this is RE? Sheesh.

SFWoman Says:

Wow, I just read the WSJ article, the entire front page plus about 80% of page three of the Journal Report. It reads as though DinOR or HARM wrote it. Where is MarinaPrime now?

Remember how the day after 9-11, the headline of Le Monde (France's largest newspaper) was "We are all Americans". We'll, now that even the perma-bulls over at the WSJ are on the bear-bandwagon, I guess you can say:

WE ARE ALL HOUSING BEARS!

DinOR :

Many mutual funds - including some Vanguard index funds - had so much accumulated losses from that dot com crash that they did not pay any cap gains even in 2006 ! (I forgot where I read this back in Dec, so I could be wrong.)

A house is an inefficient way of building wealth.

Wait a minute. It's worse than throwing away money on rent ? Now where did they get that idea ? Complete baloney.

3. The Best Burger

That's right - let's get our priorities straight!

Maybe someone can invent a FBurger - a patty with ramen noodles on top.

The patty is ramen noodles. Stuffed right between two ramen noodle buns…

Nice. But you can only pay for the FBurger with a cash-out refi.

I don't know why it is, but I really love these Schiff video interviews .

'The B-word again ! Coming not from a doom-gloom blogger but from a reputed source. So it’s worth visiting this hated word again.'

Ha, even though the bloggers were right all along, somehow they still aren't as credible as the horty torty experts. God, I love the internet, it really is the great equalizer. These clowns should pack up their stupid talk shows, and major media outlets should clean house and start hiring someone with a real track record. These losers missed, or were entirely wrong about the biggest, and most obvious economic event of this century. After missing the tech stock bubble, they went into complete denial when humble people questioned the robustness of the housing market. I laugh myself sore sometimes, and other days I feel depressed as I read the news.

http://www.europac.net/Schiff-CNBC-3-12-07_lg.asp

The only acceptable bailout is the standard FDIC insurance on deposits. Anything else is completely unacceptable in my opinion.

PAR,

Exactly. Not only do they move (at least) every 7 years they re-fi every 18 months!

Hopefully now that housing has cooled considerably future owners will be able to keep their counter tops and bath decor/fixtures more than a year without replacing them?

Let's get back to basics.

From Ben's blog:

“That’s a surprising 40 percent more than all other subprime purchase loans made in metro areas. I fear that aggressive subprime lenders in some markets may have helped hyper inflate prices.”

“San Francisco’s $392,400 average subprime loan in ‘06 was the nation’s highest. Santa Cruz, at an estimated $352,100, was next in line. Orange County’s typical 2006 subprime home purchase was financed with an estimated $312,400 loan.”

Uh, what were people buying with just $392,400 in SF? A parking spot?

• If you bought a house in Los Angeles in 1990, just as the real-estate market turned downward, you would have had to wait a decade for your home’s value to return to what you paid.

That's where the Merc comment comes into play. California is so special that even if your place drops in price, it's sure to come back up in value in 10 years.

PAR,

Way Cool chart! It will be as handy as a medical chart tracking as the virus spreads. (Best to keep it nearby).

"Uh, what were people buying with just $392,400 in SF? A parking spot?"

I'll guess a 700 sqft 1BR condo.

I’ll guess a 700 sqft 1BR condo.

I thought SF condos cost 800/sqft and up. 392K may get you a 500 sqft studio.

Kurt, long time no see.

Did everyone see this?
http://calculatedrisk.blogspot.com/2007/03/segmentation-of-residential-mortgage.html

Now this would certainly make a nice t-shirt graphic. :)

With the new bankrupcy laws in effect, people will now be financial serfs. The banks don't need a bailout, they got their changes in the bankrupcy laws.

I say let people who screwed up bad learn the hard way and dig themselves out from the debt they took on. It may take 20 years to fix their messup, but I think it is a pain our nation must endure to change our ways. The people who commited mortgage fraud should be held accountable as well. I am starting to think that state sponsored labor camps/programs would be a good idea. I don't want to pay to lock these morons/clowns up over fraud.

I’ll guess a 700 sqft 1BR condo.

I thought SF condos cost 800/sqft and up. 392K may get you a 500 sqft studio.

I did a search on SFARMLS for properties between $390-400 in SF and there were 17 properties in total. One of them was actually a 3/2 1050sqft:

Listing #319415
$390,000 (LP)

Price/SqFt: 371.43
65 Western Shore Ln #5, San Francisco, CA 94115 Active
Beds: 3 Baths: 2 Sq Ft: 1050 Lot Sz:
District: 6-D Yr: 1964

Great Value! Top floor unit of the St. Francis Square Cooperative that is centrally located in San Francisco's Western Addition. Walking distance to Buchanan Street YMCA, Japantown, Fillmore St. shopping and dining and St. Mary's Cathedral. Easy public transportation via MUNI from Geary St. Open Sunday February 4th from 1-4pm with Fresh Baked Cookies and Milk!!!

SF experts - What's wrong with this unit?

Hey PeterP-

Yeah, I'm sure that's too cheap for an SF condo. Maybe a studio apt conversion?

Waterfront Marin condos can be had for about $600/sqft and upwards, but that probably pales to SF prices (I haven't checked lately). Still, damn expensive for a glorified apt.