Please, just give me a reason to vote FOR you

It's election time again, and I can't remember the last time an election has been this controversial and well publicized. It's quite astonishing actually. Obama has half hour specials on several major networks, McCain and Palin have had drinking games dedicated to the use of the word "Maverick"... it just seems so weird.

Yet, you really have to search high and low to find any information on what the candidates actually plan to do. Every interview with either major presidential candidate is either small talk, blanket statements of promised prosperity, or mudslinging to the other candidate. I'd like to say I was against 's economic policy, but it's really hard to find out any information about that. This isn't just the federal level. All the local commercials I see for representatives and other elected officials are just mudslinging campaigns about how the other candidate hates America and probably killed a kitten when they were young.

Let's go back to the presidential candidates because they are more in focus. Now, the one place you can find details is on their websites. JohnMcCain.com and BarackObama.com. There are details there on what they plan to do, but you do have to dig down into their sites to find it. I think I stumbled on a interesting problem with politics. If you make a big stand on any issue with any details, people start to pick it apart, and you polarize the public about the issue and supporting you in general. If you just talk about how the other candidate is inexperienced or how the other candidate played golf with President Bush too many times, well that doesn't have the same effect.

I guess this is the main problem with a 2 party system. It's more about making people not vote for the other candidate. So, I'm going to break rank and make an endorsement. For those of you that have been living under a rock and don't know, we have an electoral system in America. If the majority of a state votes for a presidential candidate, ALL of the electoral votes for that state are committed to the candidate.

Now, if you live in a swing state, your vote counts, and you should probably vote for McCain or Obama because you'll actually have an impact. If you live in the majority of the country though, your vote is meaningless... basically. Your state is so committed to one party that you can't possibly hope to change that.

Here is a website to look at that tracks polls in every state and how far apart the votes are:
link

If you live in any state that is solid blue or solid red (most of them), your vote is basically a waste. I mean, yeah if millions of people in your state thought that, it might change things, but let's get realistic here. Writing this message in my blog it just might make it to 100 people at the most. Living here in California, it doesn't matter which way you vote, Obama will get all 55 of our electoral votes. In case you didn't notice, presidentical candidates don't campaign in California. What you can do though is vote for Ralph Nader. I think if we had a three party system that candidates would be more apt to say why you should vote FOR them and not against the other guy. Plus I think I agree with the Libertarian party more than any other party right now.

So, join me and vote for Ralph Nader, president for 2008. He won't win, but if we get enough votes, that party may have federal funding for 2012.

Real Estate Update

I'm sure you've all moved on to better post populated blogs at this point. I really apologize. Posting once a year just isn't a good way to keep readers :) The truth is, I've been too busy lately to post. My industry has been strangely shielded from the recession so far (or maybe it's just me), and I've been working on my new house lately too. (well new for me, I closed escrow in July).

Owning a house means that I'm legally obligated to say that "real estate can only go up", "paying too much for a house is patriotic", etc.... But I'm going to break rank here and say that.. Real estate is still going down. I bought because I got a killer deal, and I really looked hard for it. I bought a nice remodeled house west of the 5, north of downtown, south of the merge for about $230/sqft. I haven't even seen a deal better than what I got since I bought it. It's a bigger house, and I actually could rent out every room but mine and have my entire mortgage covered. I'm a short bike ride to the ocean, and I don't have any HOA to deal with.

That being said, what I paid is probably where most prices will be at pretty soon. There are some signs of a bottom coming up though. As I've always said though, you are in no rush if you are a buyer. When housing bottoms, it'll stay bottomed for years. (not months, YEARS)

I'd make some more posts if I had the time. Honestly though, Real estate isn't very exciting lately. It was a big deal before because it was changing direction and accelerating downward.

Based on the Case-Shiller index, real estate has dropped in San Diego about 1/3 so far. This is probably right. OCRenter (who I won't bother linking to because I'm sure you all go to his site on a regular basis) shows it getting close to the projected 2001 level (adjusted for inflation), which is probably a fair measure for a midpoint. Some people are still under the opinion that real estate has another 30% to go, and they might be right.

I doubt it though. What I've always said is that when the fundamentals catch up to real estate, then you'll have a bottom. When owning (with 20% down, add up mortgage+HOA+prop tax) is the same cost as renting, then that's about as far as it can go. In 2005, we were seeing 2-3x rent to own, and now most places are still well above rent.... but there are some places that are priced "right".

Bottom line, you could shop around and buy a foreclosure now or wait a little and buy in a year or two. It's not going to matter.


On a side note, if anyone wants to take over this blog, I'm okay with that. I'll probably be starting a new blog soon that will focus more on financials and investing.

Where the hell have I been

I suppose some of you are wondering.... or maybe you've completely given up by now and figured this blog was dead. What the hell happened to Sven?

Well.... I'll tell you. Sven has been too busy to blog lately because he has been buying a house. That's right. I bought a house. Escrow closed, I got a loan. I came in with perfect credit, verifiable income, and a down payment. I'm no longer a "Bitter Renter" as the real estate bulls liked to call me all those years that I was preaching the collapse in the real estate boom. I don't consider myself a "FB" (f**ked borrower). In fact, I think I made a good financial choice because I got a smoking deal in today's market. (emphasis on "in today's market", tough to predcit the future is)

The house is everything I wanted it to be, and I got it for probably 200-300k less than it would have cost me in 2005 to buy the same house. I'd love to give out the address, but I'm sure I have enemies with this blog over these years. I'd rather not spend a few months cleaning user toilet paper off the roof.

I like blogs, and I like blogging. I think it's the greatest thing. You have this amazing source of information that isn't tainted by corporate pressure the way that main news sources are. It's gritty, it's personal experiences, and it's very informative.


Does this mean I think everyone should go buy now? No. At some point, you might decide that it's worth it for that property and your current situation from the sound fiscal and personal perspective. Prices have shown consistent reductions since the peak, and there's been no end to this. The only light at the end of the tunnel is the fact that MLS inventory is flattening this year. We actually had a reduction going into the summer months. This is a break in the trend, but this doesn't mean much. We've proven that there's a huge backlog of foreclosures waiting to get on the market, and prices are still in freefall. At the end, the price you pay will matter a helluva lot more than inventory ever will to you. I do see the inventory has a leading indicator of price movements. So, I believe the end of equity declines is on the horizon.

I've had some people offer to take over this blog, and that's probably the best bet. I could maintain it, but I'm not really interested in real estate any more. I bought my house, I'm done watching everything the market does. Even when I wasn't blogging all the time, I would spend at least 20-30 minutes a day just reading market reports, looking up new listings, and investigating one thing or another. So, I probably will find someone to take it over.

That all being said, if you do decide to buy now, here are some first-hand tips (I'm not going to bother with the classic tips of getting an inspection or shopping for homeowner's insurance or doing your final walkthrough or turning on all the faucets because everyone else will advise you to do this anyway) If you dont' want to buy now, it's probably a fine move. Prices aren't going to take off anytime soon.

1. Use Redfin. I tried using a very well respected traditional agent, and they just try to direct you to a bunch of overpriced houses at the top end of your price range. It doesn't matter how well you explain what your specific needs are to your agent, they will just ignore them or they'll ridicule you for wanting what you want. I had an awesome experience with Redfin. They were great, no pressure, and I got back a huge rebate. Their web search tools are great, they were friendly and efficient, it was awesome. The only issues that I had at all were with the selling agents.

2. Get a FHA loan if your loan amount is over 417k and under 694k. It's a little more paperwork, but the loan is much easier to get. Lenders are being ridiculous with "conforming jumbo" loans, and even a perfect applicant will probably get turned down a lot. Apply with at least 2 loans right off the bat, and stay on them to make sure they got everything they need. If your loan is under 417k, get a conventional loan. (it'll be a lot easier to process too)

3. Buy a foreclosure. Short sales take too long and normal listings are still close to 2005 prices. If you want a deal, you need to buy from a bank. This means you'll have to sign some crazy bank addendum that is non-negotiable and has crazy terms, but it's worth it. Look to buy a place at about 20-25% less than comprable listings and 10-15% less than comprable sales. (only look in a 6 month window)

4. Get a loan directly from a major lender. You'll save a lot of money, and they won't screw with you at the last minute. All the private mortgage brokers love to add a point here or there at the last minute when you are screwed if you don't accept it. They are all your friends, they all want to talk about how they love your neighborhood that you are buying in, and they all sound like used car salesmen. You'll notice a huge difference dealing with a major lender in that everything doesn't sound like a made up number.

5. Double check everything that doesn't look like a mandatory disclosure. People like to put down wrong numbers, wrong addresses, etc... on all the loan and escrow documents. I think it makes them feel warm and fuzzy inside. Just have sympathy. Remember that most people got jobs in real estate because they found they had no other marketable skills.

6. Offer 90% of the asking price if there are no other offers. If you catch a foreclosure early, you very well could get in before anyone else notices it and walk away with a better deal. Generally, you'll always get a counter at around 90% of the asking price. If you go lower, you may not get a response, and people really don't move that much. You are better off waiting for the price to go down and offering later than trying to negotiate for more than 10% off the asking price.

7. Most imporant - Be Patient. There's a lot of inventory, but there's a very small inventory of "deals". Places that are truly underpriced to sell. These places go fast. I've been watching the market very closely, and I see the places I would consider to be a "deal" rarely ever last even a month on the MLS. I saw one place go pending in a day. Get a solid feel for the market and what you want. Set up a search criteria on Redfin's site, and check it daily for new listings. When you see a deal, pounce on it.


Disclaimer - With the exception of the rebate I just got, I have never received any money in any way including sponsorship or advertising dollars from Redfin. My reccomending them is purely based on personal experience.

This is a new one, Suddenly you have pay PMI

(image source: http://thewrittenblog.com)

This was something I dug up just today. It's a complaint from a customer of the USAA loan servicing company. Essentially, this is what happened. The customer acquires a loan that is serviced by USAA, and then they apply for a HELOC on top of that. They did this last year. Recently the bank reassessed their house and froze their HELOC. This is actually really common, and it's something the banks are doing now to minimize their risk as many of the HELOC's default.

The second part of this story was the strange and sinister part of it. The couple had enough equity in their house to not pay PMI. For those that don't know, Private Mortgage Insurance (PMI) is an extra fee you typically have to pay on your mortgage if your LTV (loan to value) is > 80%. It protects the bank in case you default. (it doesn't do anything for you) When the bank re-assessed their house to freeze the HELOC, they also started requiring that this couple begin paying PMI on their mortgage.

Now, personally I'm all in favor of banks freezing HELOCs. Preventing people from submerging themselves more in debt is a good thing, and I have no sympathy for those stories of people who planned to pay their damn mortgage with their HELOC. This is just dragging out a problem that needs to resolve itself faster so a healthy market can emerge.

That being said, IMHO, a lender suddenly adding PMI when it wasn't required before should be illegal. I know it's probably a line somewhere on page 231 of the loan documents that the buyer signed, but you shouldn't just arbitrarily be able to add a fee to a perfectly fine performing loan. If the initial agreement was that the LTV was fine and a PMI was not required, you should only be able to add an extra fee on a refinance. The lender should just be happy that they get their payment every month.... especially in today's market.

What're your thoughts?

Exactly one year later

It's been one hell of a year. I'd say it's been one of my busiest years ever. The crash in the real estate market has been good, great, and excellent for the tech industry. The concept behind this is a fun one. There's really only so much money out there, and the investors that were driving tech, biotech, and beanie baby innovations were all just pumping their money into the Fat Bastard that became the real estate industry.

Thank god it's over. The rest of the world can prosper now. I see that all the Costa Rica property spammers have taken good care of my blog. (bleh, time to clean up some comments)

What are we left with now. Well... I was right about everything. I mean, I might as well have predicted gravity, but, hey, I feel smart about it. I don't even know where to begin. Say you had bought those Countrywide Puts that I was recommending? Well you would have quadrupled your money. Say you listened to David Lereah and bought in 2006? Well you would have 14% less money now. I'd say that makes me about 5 times more right. (give or take, but hey who's counting)

The market has changed, and now we are in a new dynamic. Just where is Mr. Bottom going to be? If you are the kind of person who might end up on this blog, you are probably shopping for real estate. You might want to know "Just when SHOULD I buy?" That's the million dollar question... I mean it was the million dollar question in 2005, now it's the $850,000 question, and should we wait till it's the $600,000 question? Should we wait till it's a $550,000 question? These are all great questions.

Instead of answering them, here's a picture of some past statistical data that just looks cool:


Seriously though. Let's talk about it. Why not buy now? Why not buy a year from now? Here's something to keep in mind. The above chart shows movement from 1990 to about 2007. The chart then drops off the edge and dies a tragic death. This chart is a measure of change, not a measure of prices. In a way, that actually makes it more useful. Essentially, real estate was in positive growth territory all the way from 1997 to half way into 2006. That's 9 years of positive growth. Now we have had almost 2 years of downward movement. The last downward cycle we had in real estate followed a surge that was the statistical equivalent of mini-me to the most recent real estate boom, and it took 6 years before any real gains could be established when the graph went into negative terrirtory. 6 years!

This actually makes a lot of sense if you think about it. When the dot com crash occurred, it took almost 5 years for people to take the internet companies seriously again. These movements take time, and prices will likely flat line for years after they have finally reached a settling point.

There is no crystal ball here. If you want to buy, buy to live. Do the math. Run a rent-vs-own calculator and set the rent appreciation and housing appreciation values to 0%. See exactly what you are getting into. If you are paying $300 more a month, but it's worth it to you so you can own the place you live in and get a tax writeoff, that sounds great! If you are paying double what rent would be for your POO (Pride Of Ownership), well maybe you aren't thinking things out. Financing is hard now. Expect to put 5% down for under 417k, and 10-15% down for over that. If your credit score isn't over 700, maybe it's not a great time for you to buy yet.

As it stands now, prices are still plummeting and cooler heads will prevail in much larger houses for a smaller price. The deals you can find now are few and far between with most sellers still clinging to the prices of yesterday. The actual inventory of reasonably priced homes is very small, but the inventory of overpriced homes is huge. It's not a buyer's market..... not yet anyway.

Good to be back!

An End to this Blog

As I'm sure is quite obvious to my loyal readers, I haven't been updating this blog lately. The most common excuse for this is just that I haven't had the time, but there's another reason to it.

The purpose of this blog was to try to speak from a position of reason when every major news outlet was saying "buy real estate". I began back in last 2004 just telling people that toxic mortgages mean you never build equity and property can't go up forever because eventually no-one would be able to afford anything. People looked at me like I was crazy, but I did manage to convince a few people, and they are better off today because of it.

Now, I'm getting redundant. Back when it was just the bloggers forecasting a drop in real estate, it was "us vs the mainstream media". Now the mainstream media has caught up to us, and they are echoing the same stuff. It's like we gave you today's headlines a year and a half ago. I laugh every time I see a new article talking about pay option loans being hazardous like they were the first people to question them. Even the NAR finally conceded that housing was going to continue to go down. (first negative prediction that I ever heard). I can sum up any more messages with five words. Real estate right now sucks. It's that simple, and it's not going to get better any time soon. Property values transition very slowly compared to other markets because of the differences between properties, and you don't have to worry about "missing the bottom". No area will be "immune" to the falling real estate market, but some areas will feel it worse than others. Mostly this will have to do with the local economy and how much prices rose in that area (more up means more down, think pendulum).

Patience is key here. If you want to buy, you can wait for prices to be flat for a whole year and still not miss the bottom. For a time scale, the last 2 property recessions were about 6 years long. This doesn't mean it will be 6 years, but it means that it can very easily go on till 2009-2010. Also, the rest of the economy WILL be affected by this. Just like the property bubble fueled the rest of the economy, a property recession will slow it down. Same thing with the tech bubble affecting everything else back in 2000. I'm not being NostraSvenmus here. It's like saying that if you drop a rock in the lake, it will sink. At some point, something else will fuel the economy again, and it will be the next bubble.

This was my first foray into blogging, and I think I might start up another blog about a different topic soon. I may even get into real estate investing in the future that I know so much about it. If you have any interest in getting in on that, let me know. I have no plans to even start down that road till things stabilize, and that could take years. Right now, I'm investing in bonds till this all blows over. If you feel like chatting about anything, or for whatever reason want to make contact, my email is svenbubble@yahoo.com.



Anyway, this blog has been a lot of fun, and I've met a lot of really smart and great people with it. If someone feels like continuing the blog in the same spirit, let me know. I'll continue to be active responding on other blogs, and you know where to find me. If I start up anything new, I plan to post it on here, so you may want to check back if you find my writing amusing. (or are bored at work ;)

First Podcast will be Saturday May 5th

I'd like to give this a shot. I'm going to be recording a podcast on May 5th. This will be available to download for free obviously, and I will post a link to it right away on here. I brought this up a few months ago to some of the local bloggers, and they showed some interest back then, but I didn't carry it any farther due to lack of time. So, I'm not sure who's going to be on board yet, but I'll have a better idea as we get closer to the 5th. If you would like to get involved yourself or have any content you would like to be included in this podcast, please send me an email at svenbubble@yahoo.com.


Ideally, I'd like to get a financially focused individual (like an economist or an independent investor), another blogger, a real estate agent, and someone involved with banking or loans. This isn't restricted to those as I get emails from some people who are none of those things yet have volumes of well researched information to contribute anyway. Specifically, I'd really like to get the mystery reader in on the podcast, but we'll see if he's willing to expose his voice. Naturally, we'll all use aliases so we don't get any rocks in our windows ;)

Why people fall into foreclosure so fast

Foreclosure is the big news nowadays.

Here we have 2653 Magnolia Ave.
San Diego, CA. 92109

3 bdrm, 2 bath, 1103 sqft house
Year Built: 1955
2 garage parking spots.

This house was purchased July of 2006 for the hefty price of $770,000. Back in July, we were almost at record housing levels, so why would anyone dream of buying only to try and flip?

To make a long story short, it was listed 41 days ago with an incredible price range of $699,000 to $849,000. That's a $150,000 range on the price. Very strange in a market where the buyers are scarce.

Well, it looks like the owner is over $11,000 behind, and a notice of default (the first step in foreclosure) was filed on 4-14-2007. Now, I really hope for the sake of this person's intelligence that they had some unforseen tragedy because I can't see how any sane person would buy in the middle of last year with the intention to flip within 6 months.

Anyway, here's a loss breakdown at $699k, but keep in mind that this is probably a short sale price so the bank would be taking this loss.

Purchase Price	$770,000.00
Sale Price	$699,000.00
Association Dues	$0.00
Holding Period(mo)	9
Mortgage Paid	$37,537.50	(6.5% interest only)
Closing Costs	$4,000.00
Property Tax	$7,218.75
Estimated Monthly Rent	$2,200.00
Estimated Monthly Loss	$1,605.08	(if rented)
Estimated Monthly Tax Savings	$1,167.83	(using 28% tax rate)
Sales Commission	$41,940.00
Total Loss	$131,385.75

On a side note:

This was submitted by a reader to me via email. I want you to know that I really appreciate the help in providing content for my readers. I've been short on time lately, and you've all been very helpful in keeping this blog rolling. The voice of San Diego just posted an article about how the number of foreclosures in March just broke the all time record. That record was set in October 1996 when 389 homes were repossessed. Last month, 433 homes were taken back by the banks.

"The month's foreclosure rate mirrored the statistics for the entire first quarter of the year: A record 1,183 homes were lost in foreclosure in the first three months of 2007, edging past the previous peak of 1,059 in the third quarter of 1996, when the region was emerging from a recession."

That's very significant because every one of those homes is going to be for sale as a highly motivated REO very soon.

Also from the mystery reader:
Economist's blog on the problems with bailing out stupid buyers
2.7% of all homes sit vacant right now.... in other words we have too many homes, not enough people.
Washington post article on appraisal inflation. (we all knew about this)
Lenner is asking subcontractors to take a 20% loss on work already done.
Article from some analyst at Pimco telling people to still rent.
Article in the Washington Post spotlighting some anecdotal cases of people being upside down on their mortgages.
Washington Post article about how troubled buyers are neglecting to pay their HOA fees now.
Another pro-renting Washington Post Article
Subprime meltdown is spreading.
Sheeple's guide to losing money in the housing market.
Another major lender cuts profit forecasts.

The difference in closed sales since March of 2005 shows that about 1,000 more properties sold in 2005 than March 2007. So sales dropped by over 1,000 properties, or 33%.

The $ amount of closed sales for March 2007 was a massive 500 Million dollars less than March 2005.

MONTH	# of New	Closed	Closed
2005	Listing	Sales	Sales
January	6,311	2,297	$1,388,433,784
February	5,625	2,308	$1,337,690,916
March	7,062	3,564	$2,042,999,668

MONTH	# of New	Closed	Closed
2007	Listing	Sales	Sales
January	7,276	1,768	$1,036,452,704
February	6,237	1,820	$1,095,380,619
March	7,553	2,479	$1,538,806,180

Another property drops below 2003 price

Something to keep in mind is that if prices drop below 2001 levels, we've basically evaporated the entire housing boom that we had. This is something the mainstream press should be advising possible real estate buyers in today's market. Basically, if you look for it, you can get a place for 2002-2003 prices quite easily. It would be like telling everyone going to a car dealership that they can bargain the price down 30% or so.

1801 Diamond St #113 (Don't have a picture, but it's in the plaza)
San Diego, Ca. 92109
2 bdrm, 2 bath, 1032 sqft condo
Year Built: 1975
HOA: N/A (probably ~$325)
Purchase Price (12/03): $367,000
Sale Price (03/07): $363,000

Purchase Price	$367,000.00
Sale Price	$363,000.00
Association Dues	$325.00
Holding Period(mo)	40
Mortgage Paid	$79,516.67	(6.5% interest only)
Closing Costs	$4,000.00
Property Tax	$15,291.67
Estimated Monthly Rent	$1,500.00
Estimated Monthly Loss	$638.59	(if rented)
Estimated Monthly Tax Savings	$556.62	(using 28% tax rate)
Sales Commission	$21,780.00
Total Loss	$55,323.67

Some links from the mystery reader:
US Homebuilder bankruptcy risk in '08
Article on the Bubble People on Counterpunch
California foreclosure rates nearing all-time record levels (yikes)
From Foreclosure Forum, chart of NOD rates
David Lereah's condo investment is going down (righteous!)
Housing Boom tied to sham mortgages (washington post)


annnnd, details coming up, but I'm looking for some people who have been doing a lot of research on... well these kind of topics to start a weekly podcast with me. I've mentioned it before, and some of the local bloggers showed interest, but I never followed through. I think it might be a better medium to discuss what is going on then through a blog in the near term.

Quick post

Not to detract from today's other post below, Here is a quick link to a really good rent vs own calculator I stumbled on:
http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html


It doesn't calculate as many factors as the one I wrote, but it displays it very nicely in a graphical fashion that I will probably imitate (aka steal, but everything in software creation is about imitation) for future versions of my calculator (if I get time to finish it).

another house at 2004 price

This is not news, we've seen places SELL for 2002 prices. This house is merely being offered at roughly its 2004 prices. It'll likely sell for quite a bit less than they are being offered for, but this is probably as low as the seller can go without negotiating with the bank for a short sale. On a side note, if you look at the inventory numbers, we've been climbing all year again. This year may surpass last year as the all time high inventory in San Diego. It's a good time to be a renter.

800 Venice Ct
San Diego, CA. 92109

2 bdrm, 2.5 bath
1141 sqft house
Price per sqft: $898 (wow)
2 car garage
DOM: 4

Purchase Price (07/05): $986,000
Asking Price: $1,025,000


Here's the breakdown IF he somehow sells it for his asking price:

Purchase Price	$986,000.00
Sale Price	$1,025,000.00
Association Dues	$0.00
Holding Period(mo)	21
Mortgage Paid	$112,157.50	(6.5% interest only)
Closing Costs	$4,000.00
Property Tax	$21,568.75
Estimated Monthly Rent	$2,500.00
Estimated Monthly Loss	$2,372.48	(if rented)
Estimated Monthly Tax Savings	$1,495.43	(using 28% tax rate)
Sales Commission	$61,500.00
Total Loss	$76,322.15

Keep in mind there's another house which is only asking for $735/sqft right next door and closer to the water.

Oh BTW, for those curious about the Plaza (the big complex near Vons in PB), Here's some info on a few units:
Tax Liens on units: #117, #123, #213, #217, #232, #304, #319, #325
Pre-forclosure on unit: #333 (loan originated on 12-20-2005, NOD files on 2-14-2007)
Unit #318 is bank owned now and they are trying to sell it.

Usually tax leins are the first to hit. People pushing to sell their houses will let those slide first and then finally let their place slip into foreclosure. It's funny to walk by the place and see all the realtors sitting outside in lawn chairs on the weekends waiting for people to come to their open houses.

Also, here's another candidate for first payment mortgage default. Generally, you don't know if someone never made a mortgage payment, but you can pick out some interesting details. If someone has a NOD filed in about 6 months of buying, there's a good chance that they just didn't feel like making any payments.

829 San Fernando Pl Apt 4
San Diego, Ca 92109
2 bdrm, 2 bath, 780 sqft condo

Purchase Price (05/06): $525,000

Notice of Default filed on 12/06 in the amount of $420,000. This is his primary mortgage on what is probably a standard 80/20 split. $420k is exactly 80% of $525k. So his second mortgage is $105k.



Sorry for the slow update. Blogger wouldn't let me in because they were upgrading everything. Enjoy!

Wowza, just relisted 10 days ago

928 Sapphire St #A (those that watched Fight Club may remember what the letters instead of numbers means)
San Diego, Ca. 92109

3 bdrm, 3.5 bath, 1316 sqft condo
Year Built: 1992
HOA: N/A (estimated $200)
Price per sqft: $494

Purchase Price (07/05): $731,250
Asking Price: $650,000 (I guess 650-725, but if no-one was biting at 695-774, you can assume the new price point is 650)

Not much to say about this one. BTW, 1713 Diamond (for those that were following that) has been relisted at $509k now. It has a new sign out front, and I believe the previous owner finally lost the fight and the bank is trying to sell it now. (it was purchased in 05 for $560k, but they had no bites at $515k).


Here's the breakdown on Sapphire:

Purchase Price	$731,250.00
Sale Price	$650,000.00
Association Dues	$200.00
Holding Period(mo)	21
Mortgage Paid	$83,179.69	(6.5% interest only)
Closing Costs	$4,000.00
Property Tax	$15,996.09
Estimated Monthly Rent	$2,100.00
Estimated Monthly Loss	$1,713.59	(if rented)
Estimated Monthly Tax Savings	$1,109.06	(using 28% tax rate)
Sales Commission	$39,000.00
Total Loss	$160,235.47

Happy April

Sorry the last post didn't have the April 1st date on it. I trust all is well with everyone.

Here's some stuff you might like:

Just got a link to this from the blog owner himself. It's a blog about predatory lending practices, and he mentions that Countrywide's REO's are up 42% in March. That's month to month, not year to year. Good Stuff.

Contributions from mystery reader:

Another article in the UT about skyrocketting home loan defaults.
And one also in the San Diego Business Journal.


More coming up. Stay tuned!

A Confession

Folks, I have a grave confession to make. The entire housing drop was all just an elaborate orchestration from us, the Bubble Bloggers.

What I am about to tell you now was never meant to be told. What you have here is an elaborate network of individuals who all gathered once under a vow of silence to change the minds of the masses. This may be the biggest conspiracy ever orchestrated, and we did it by harnessing the power of the internet.

It wasn't easy. We needed to make people think we were right, and we did that by changing the facts. To this end, the NAR was great because of the lack of information they let spread from the MLS. This let us hire a crack team of hackers to break into all the major statistical companies and change the figures. David Lereah would have been right about everything, but not after we had a chance to change the numbers. I think you'll find that if you search for David Lereah on Google, you'll find right at the top is the David Lereah watch. The guy that runs that blog says his name is David. It's really Antonio. For this blog, his mission was to track everything David Lereah said, then pay off the researchers, hack into statistical databases, or whatever else needed to be done to make the "facts" prove him to be wrong yet again. As far as we were concerned, he was the last voice of the NAR, and we needed to make him look like an idiot.

Back in 2005, we were called to action. This all began as a secret brotherhood, and our first order of business was to create a database like none other. We tracked who had second homes, and who was on an extended trip somewhere. Then, we placed For-Sale signs in front of their houses. This led to the plethora of stories and video shoots of whole neighborhoods littered with For-Sale signs. We also toured every city block on the weekends dropping "Open House" signs that (of course) didn't actually lead anywhere. When the president of the North County Association of Realtors called one of the many drops last year a "False Drop"... He was right. It was all our handywork.

In 2006, we launched many, many blogs, and began to home in on insignificant issues like affordability, rent vs mortgage comparisons, toxic mortgages, etc. This was all a clever distraction to draw people away from the concept of "Pride of Ownership" (Acronym: POO). We hid the studies that showed that POO had the potential to extend your life by 20 years, improve your sex drive, and make all your childhood friends jealous. It's not easy to convince people that they shouldn't think about POO. We did it with very clever ploys like telling people they really didn't own their house because they were 105% financed with a pay-option loan. It's hard to think of all the people who were deprived of POO because they listened to us.

Now in 2007, we have doubled our efforts by focusing in and making a big deal out of a lousy several hundred million dollars of insider sales in all the major mortgage companies and "sky rocketting" foreclosure rates that are still below the all time historical high.

A realtor who asked not to be identified* wanted to be quoted saying: "Thing is, I chose this profession to serve the people. I could have had a high paying job at Starbucks or Dunken Donuts and maybe got some use out of my GED. It's all these bubble bloggers who have turned people against us. These selfish people at the top who think that just because someone has a track record of being irresponsible with money that they shouldn't be able to borrow to buy a $750,000 house. The truth is, we were the good guys in all this...


Really."


* - but you all know him as Richard Head


(shown - left: It didn't take much persuasion to get access to the local Sandicor statistics databases)

(shown - right: Fluffy was used for the more.... direct approach)

Two units in the same complex

1401 Reed Ave, Units #17 and #18
San Diego, CA. 92109

#17, 2 bdrm, 1 bath, 918 sqft condo
Price Per Sqft: $511
HOA: $183/mo
DOM: 36
Year Built: 1980
1 Parking Spot

#18, 1 bdrm, 1 bath, 645 sqft condo
Price Per Sqft: $557
HOA: $143/mo
DOM: 35
Year Built: 1980
1 Parking Spot

#17:
Purchase Price (12/05): $459,000
Asking Price: $469,000

#18:
Purchase Price (12/05): $379,000
Asking Price: $359,000

This is interesting. They both closed escrow within 3 days of each other, they were both listed on the MLS within 1 day of each other, and they are right next to each other.

Who wants to bet this isn't just a coincidence? Remember how Casey Serin was purchasing multiple properties at the same time so that banks wouldn't know about each other on financing? I wonder if something similar was going on here.

It does surprise me. I mean to sensibely afford a condo for almost 500k, you would need to be a couple with dual income in the top 15% wage earners. I just imagined the top wage earners living in something better than an old 2 bdrm 900 sqft condo. I guess it's all the damn martians moving into the nice places. (or something absurd like rabid housing speculation and too-loose lending practices giving money to the people with crappy credit) Anyway, here are the breakdowns:

For #17:

Purchase Price	$459,000.00
Sale Price	$469,000.00
Association Dues	$183.00
Holding Period(mo)	16
Mortgage Paid	$39,780.00	(6.5% interest only)
Closing Costs	$4,000.00
Property Tax	$7,650.00
Estimated Monthly Rent	$1,350.00
Estimated Monthly Loss	$1,101.23	(if rented)
Estimated Monthly Tax Savings	$696.15	(using 28% tax rate)
Sales Commission	$28,140.00
Total Loss	$39,759.60

And for #18:

Purchase Price	$379,000.00
Sale Price	$359,000.00
Association Dues	$143.00
Holding Period(mo)	16
Mortgage Paid	$32,846.67	(6.5% interest only)
Closing Costs	$4,000.00
Property Tax	$6,316.67
Estimated Monthly Rent	$1,050.00
Estimated Monthly Loss	$965.89	(if rented)
Estimated Monthly Tax Savings	$574.82	(using 28% tax rate)
Sales Commission	$21,540.00
Total Loss	$60,994.27

On a side note, I was looking up some bonds earlier today, and I noticed a bond on the list from Lehmann brothers (home builder) with a 14.5% coupon and a double digit yield (that's how much of your investment is paid back to you every year). Yet, moody gave it an A rating... Now why would any company with an A rating need to offer so much?

Watch this flipper try to sneak out of the falling housing market

1334 Oliver Ave
San Diego, Ca. 92109

3 bdrm, 2 bath, 1245 sqft house, 3100 sqft lot
Year Built: 1950

Price per sqft: $582
DOM: 35
1 car garage

Purchase Price (05/05): $725,000
Asking Price: $725,000


Here's another flipper who just listed his house a little over a month ago. He's trying to jump ship without too much in losses, but, that's the devil about buying in a super inflated market. In a balanced market (Rent close to mortgage), you could sell a place for what you paid for it and only be out commissions, maintainence, and closing fees. In this market, you just paid that huge premium of 2 to 3x rent for the pride of ownership. Honestly, this guy is going to have to lower his price anyway. It's a good location, but way overpriced.

Purchase Price	$725,000.00
Sale Price	$725,000.00
Association Dues	$0.00
Holding Period(mo)	22
Mortgage Paid	$86,395.83	(6.5% interest only)
Closing Costs	$4,000.00
Property Tax	$16,614.58
Estimated Monthly Rent	$2,100.00
Estimated Monthly Loss	$1,482.71	(if rented)
Estimated Monthly Tax Savings	$1,099.58	(using 28% tax rate)
Sales Commission	$43,500.00
Total Loss	$80,119.58

Here's a second property just because I'm so bad about updating lately.
I've posted this one before, but then the owner pulled the listing (I believe the property was pending and the deal fell through, but I have no way to tell right now).

1370 Missouri St
San Diego, Ca. 92109

2bdrm, 2bath, 1032 sqft house, 6300 sqft lot
Year Built: 1942
Price per sqft: $785
DOM: 2 (but it's misleading, this has been for sale for much of last year)
2 Car Garage


Purchase Price (10/05): $834,257
Asking Price: $810,000

Purchase Price	$834,257.00
Sale Price	$810,000.00
Association Dues	$0.00
Holding Period(mo)	17
Mortgage Paid	$76,821.17	(6.5% interest only)
Closing Costs	$4,000.00
Property Tax	$14,773.30
Estimated Monthly Rent	$1,800.00
Estimated Monthly Loss	$2,322.62	(if rented)
Estimated Monthly Tax Savings	$1,265.29	(using 28% tax rate)
Sales Commission	$48,600.00
Total Loss	$116,341.54

I promise to get better about updating this!