Bi-Annual Sales Report

Wall Street’s not worried. Wait and see, we’ll have yet another gov’t bailout.

I know what you mean about “getting stoned” by sellers. People get very emotional about their decision to buy a house. I once lost a business deal b/c I pointed to the client he had bought at the height of the market in 06′ paying $650K for a 2 bedroom, 1200 sq. ft. condo in Pasadena (The mix use bldg. on corner of Lake and Cordova). It looks like Congress will soon pass the bailout provisions without GW’s veto. Funny how the government can act so swiftly when it comes to bailing out banks and large corporation from collapsing.

Just a question about the number of Arcadia listings. Is the current number a significant jump from previous months? I recall when Arcadian was posting the number of listings each month that the number didn’t seem to change much. However the Redfin picture looks much more cluttered with little green houses than I remember.

Also, is there an easy way to get a true number or an estimate of the number of foreclosures not on the market but sitting vacant?

Hi

Has anyone ever signed up the foreclosure.com to see the details of the foreclosed homes? Is it worth for the money? How about the free 7-day trial? Your advice will be appreciated.

If possible, I would like to see a discussion thread on the implications of passed housing bailout bill by the congress and senate on the current housing market.

“implications of passed housing bailout bill”

The bill is a joke. It’s a bailout for FRE and FNM which will help banks and not the individual homeowner. The media glosses over that little detail.

A Princeton economist said look for So Cal RE to drop to 2000 levels before this is all over.

This is a very complex issue. And if the government is going to provide any financial aid it will be directed at the banks to save our financial system. The government does not think at an individual level nor do they care about the guy who overpaid for his home.

The core problem is that the government did not have enough oversight on the banking industry. They let banks commit fraud when they packaged junk (high risk) home loans into AAA Quality Bonds. That was the lie. If they had labeled the bonds accordingly (some would be almost junk grade) they would not have sold as fast and the demand would have been lower and banks would not have given out stupid loans. Without the stupid loans the homes would have never bubbled.

That is the core issue. The banks committed fraud, plain and simple. It is the falling prices that happened to trigger the bad loans going bad. But if they had true AAA quality loans with 20% down, you would see a lot fewer people walking away. Instead they gave loans for 125% of the value to people who could not afford them. That kind of buyer is going to default.

The fix? Well you can’t give more money to the idiot buyers who could not afford the home in the first place. That is like putting a band-aid on a broken leg.

The fear is keeping the dollar strong. So the government might try something to help lessen the risk on the low quality bonds. A lot of US investors bought these “AAA High Quality” bonds on the assumption they were SAFE. But they were lied to by banks. So the bailout may likely be put in place to protect some of these people. It may appear that they are “protecting the banks” but in reality they are protecting the people who have invested in banks. (Retirement funds, etc.)

In my opinion it’s a positive thing that home prices are falling. I think they need to go back to 2000 levels or less. Cheap housing is the best thing for an economy. It allow people to buy a home that fits their income, which in turn increases the sales of other consumable items. Sure people who bought in the past 5 years may have negative equity, but the same can be said for stocks, cars, and many other items. But you can’t create a policy to protect the few people who bought at the wrong time. There was no bailout for stock investors who bought in the NASDAQ in 2000. It’s a risk you take, so just let the housing market fall and when the low price point is hit the homes will sell again. It’s that simple.

So I hope any bailout is not used for dumb consumers. Nor should any bank that is bailed out be allow to operate again in the future. It should be a FDIC takeover, and when the loans are paid back so is the government. Also, the people responsible for packing junk as AAA quality need a few years in jail. (Seriously, it is white collar crime.)

Remember, the US Government needs to protect the value of a dollar. If the currency collapses we will be in a world of hurt. (And that can happen if other countries consider the US Dollar as unsafe and pull there money out of our banks.) So I think this is the governments plan, at least I hope so.

Sean, i agree with most of what you say but right not the dollar is very weak and getting weaker by the month. in the old days fear meant higher dollar and gold, not anymore.

As for investors in these junk bonds many were foreign, like in Japan, Australia and of course China. Individual participation in these bonds is nonexistant as they are usually sold in lots of $10M. So far about $400B has been written off, lood for another $600B before we call it a day.

I think a 6-8yr drop is in the cards, or about 25-40% in SoCa. Tight lending and higher rates are going to hold back any appreciation for years.

well.. reading through some of the fine print on the new housing bill…

Debt to Income Ratio of 31 percent… You need 2 years of w-2 to prove this out….

Take another 20 to 30% off home prices…

MattCURE,

You are assuming that first time buyers will be buying houses north of $500K. Most of the people who buy in Arcadia or expenseive cities like South Pas will be buyers moving up from a current house and will be rolling equity from their current home. Most families have dual incomes today. Unless you have very high income, it’s unlikely a single earner will be able to afford a SFH in Arcadia. It’s just the reality of today.

Looks like the housing bailout is final. Prudent taxpayers who did not participate in the housing fever will now have to foot the bill to save the day. I can’t help but to feel cheated by Congress and the President. Now this bill will become law, I hope the final version will atleast prevent bailout of speculators/flippers and people who used/abused their homes as ATMs.

Does refinancing with the new bailout housing bill turn your non-recourse loan (assuming one didn’t refinance or HELOC) into a recourse loan in California? I wonder who wants to refinance if they are underwater since any future profit will go to FHA.