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!