“Influx of renters raises tension in Bay Area”
Influx of black renters raises tension in Bay Area – Yahoo! News
As more and more black renters began moving into this mostly white San Francisco Bay Area suburb a few years ago, neighbors started complaining about loud parties, mean pit bulls, blaring car radios, prostitution, drug dealing and muggings of schoolchildren.In 2006, as the influx reached its peak, the police department formed a special crime-fighting unit to deal with the complaints, and authorities began cracking down on tenants in federally subsidized housing.
Now that police unit is the focus of lawsuits by black families who allege the city of 100,000 is orchestrating a campaign to drive them out.
Wow. Could this be any more misleading? Some key takeaways:
1. This article is about Antioch. Again, this highlights the importance of the difference between the Real Bay Area and the Bay Area.
2. There is crime and racial in the Bay Area. Not in the Real Bay Area obviously.
3. Renters are the sources of all problems. ’nuff said.
January 10th, 2009 at 7:43 am
What the article says is somewhat true. You do go more “problem” renters in subsidized housings. You have the poor and in some cases, the bad elements living there.
January 10th, 2009 at 8:53 am
That’s just what I told DreamT yesterday. To those who wish for price drops, I say be careful what you wish for.
January 10th, 2009 at 9:52 am
There are no section 8 rentals available on the peninsula or south bay, even ESJ. Every time you put a rental up on craigslist of any kind, for any amt you get deluged with hundreds of section 8 rentals. Section 8 is a low income rental where the govt pays part of the rent, so its a hassle for landlords but the real damage is just the quality of tenants. The reason there are so many section 8 people looking to rent, is because slowly, the old bad areas of the bay area are gentrifying and these people are being pushed out. 95127 is a zipcode like that. There are still plenty of section 8s there, but if there was a way to get an accurate count I believe the trend is down.
And what landlord allows a PITBULL? A slumlord thats who.
January 10th, 2009 at 9:59 am
Another thing, this article did not discuss the cause of the influx of renters. It says the issue peaked in 2006 so does not appear to be related to anything we are experiencing in the better areas recently.
On HUD housing from this link it says section 8 has been closed for years.
http://www.hacsc.org/voucher_wait_list.htm
January 10th, 2009 at 10:39 am
Rental post o’ the day. This house is the best deal in Sunnyvale. Its only $3100 which is very reasonable. The inside of the house hasn’t changed since the 50s with the exception of polishing some floors in the house (they didn’t even bother to add baseboards)- there is carpet in some rooms which you can barely see and the kitchen is old electric. Still for $3100 the price can’t be beat.
The best thing about this house is the last picture though. The last photo in this ad makes me want to rent it on the spot.
http://sfbay.craigslist.org/sby/apa/986051716.html
January 10th, 2009 at 10:42 am
After Katrina, there’s a huge influx of displaced people coming to the Bay Area.
January 10th, 2009 at 10:51 am
WG,
If you buy homes in the sub-$500K range to rent out, I don’t think you can avoid dealing with low income people. The one thing landlords hate dealing with is evictions from tenants not paying rent. I think Section 8 at least reduces that possibility, since the government is involved, and they stand to lose their Section 8 if they don’t pay the rent.
In any case, I’ve decided long ago I don’t want to deal with these people. Therefore, I’d rather buy in RBA and rent to professionals.
January 10th, 2009 at 10:52 am
> The best thing about this house is the last picture though.
Another Roger!
January 10th, 2009 at 12:10 pm
RE, I hear what you are saying about quality tenants but come on, you are really reaching to say that somebody that wants to spend $2400 to rent one of my places is not a professional. Thats ridiculous. I rent one of my places to a director at Cisco, they are a one income 2 child family of 4 living on his income, from Montana or somewhere so they don’t want to stay here so they choose to rent. With an income over 200K, even if you ARE a professional if you are supporting a family of 4, $2400 is all you want to spend for rent. He’s probably taking home about 8K-9K per month, not enough to spend $5K to rent in Palo Alto.
January 10th, 2009 at 12:24 pm
WG, your rental, WTF? The last pic is hilarious. It does look like a decent place though. Clean. My biggest question is why the heck does the landlord require the tenant to provide their own fridge? I guess it may encourage only long-term tenants, but it seems a bit petty.
And a director at Cisco only makes about $100k/year?! Poor dude.
January 10th, 2009 at 12:27 pm
New economic report:
A majority of those polled thought the recession would officially end in the third quarter of 2009, which would make this the longest downturn since World War Two.
However, more than half of respondents thought unemployment would peak no earlier than 2010, suggesting that economic pain may linger long after the recession is technically over.
We saw the same kind of lag in employment numbers during the dotcom bust.
http://www.reuters.com/article/newsOne/idUSTRE5090QL20090110
January 10th, 2009 at 12:29 pm
No I thought directors of Cisco make 200K? Anybody know? 200K is 16K/mo but they have to pay taxes and with no mortgage, its a big hit. So I think the takehome is 8K after 401K, healthcare etc? Just a guess.
January 10th, 2009 at 12:31 pm
Oh, you DID write $200k. I was looking at your “take home” figure, which is probably a bit low. You’re in the right ballpark anyway.
January 10th, 2009 at 12:40 pm
Meet your new landlord!!
You know that Sunnyvale house isn’t too far from me. We are talking about a decent neighborhood. I can’t check the map now to see how close it is to Fremont, but the 1300 block is right next to it. Fremont is a six-lane thoroughfare. I wonder if this place is behind the abandoned Albertson’s on Mary/Fremont?
I agree the fridge thing is petty. At least they didn’t put in coin-op laundry like our landlord in SJ did.
January 10th, 2009 at 2:01 pm
WG,
Your featured rental is worth close to $1M, and it’s renting for $3100. I’d be curious to see somes houses similar to the ones you buy for around $400K that can rent for $2400.
January 10th, 2009 at 2:02 pm
madhaus, coin-op laundry? You’re kidding. Must have been an apt or duplex? Certainly not a SFH. I have tried to buy coin-op washers and dryers before and remove the coin-op part though. I provide washers and dryers for every house I own and its amazing the life of some of those, even new, they can last only about 2 years routinely. The top loaders are more sturdy than the front loaders, the Maytag neptunes don’t last even a year, and any electronics are prone to go out. If you have a family or roommates in a house you always hope they will bring their own rather than deal with the constant repair bills etc of W/D repair. Also it can cost $120 per repair visit. I was thinking a coin op model, without the coin part would be a sturdy workhorse that would never break. Never found any without the coin though and my newer places the people brought their own W/D.
January 10th, 2009 at 2:06 pm
the ones I rent for $2400 are like the dent house from last nights posting. Thats a cash flow neutral house. He wants $2200 for it, and its a little small, and Dent is not the best street so you’d have to go over there but those are what I buy. You can find houses in that area on redfin for $450-$475K right now.
This one in sunnyvale seems underpriced to get lots of applications. it also has an original small kitchen. They could probably get $3500 for it.
January 10th, 2009 at 2:28 pm
“WG,
Your featured rental is worth close to $1M, and it’s renting for $3100. I’d be curious to see somes houses similar to the ones you buy for around $400K that can rent for $2400.”
Ever heard of prop 13?
January 10th, 2009 at 2:33 pm
WG, yes coin op laundry in a single family home. Can you believe it? This was the place near San Tomas Expy and Williams that we lowballed them on the rent in 1990. I can’t remember the zip and I’m on my crackberry so no looling up things in extra windows.
January 10th, 2009 at 5:07 pm
Wow. Only 10 days into the new year and RE has the Tool of the Year Award all but locked up. Congratulations. RE!
January 10th, 2009 at 6:02 pm
Lionel – As RE rightly pointed out, amateurs just cannot hope to compete with professionals. All they can hope is that some of their brilliance rubs off on them. Let that be a lesson in humility for the rest of us.
January 10th, 2009 at 7:39 pm
Just got home from dinner after some house hunting in south Sunnyvale. There were definitely a lot of people shopping for homes. One realtor ran out of flyers, saying over 100 parties toured the home during the afternoon. All indications are market is still strong in Silicon Valley. Who were shopping? Almost exclusively Asians and some Indians.
January 10th, 2009 at 9:18 pm
Looks like Mr. Sunnyvale Landlord (from WG’s post) is another Prop 13 beneficiary/welfare recipient. He lives up in SF; looks like he got the place from dear old mom in 2006.
Wanna know what the house is assessed for? Current property tax is $1,065/year. Assessed value is a bit over $80k. Sweeeeeeet!
January 10th, 2009 at 9:29 pm
Just imagine, buying a house will benefit all future generations of one’s family. A reason you have to buy a house at today’s prices is because your dear mom/dad was a renter.
January 10th, 2009 at 9:49 pm
I think I’m gonna throw up!
January 11th, 2009 at 12:01 am
“Who were shopping? Almost exclusively Asians and some Indians.”
“A reason you have to buy a house at today’s prices is because your dear mom/dad was a renter.”
I conclude exactly the opposite. The reason the folks you observed were house hunting is precisely that their parents have a history and cultural penchant for homeownership (and the parents were most likely not born here).
Go ahead, tell me that I missed your point now, and dazzle us with your logic!
January 11th, 2009 at 2:54 am
There’s nothing new to what I’m saying here. Immigration keeps the demand up in Silicon Valley. Money flow from foreign countries into real estate here. The trend will continue forever. If you don’t have a penchant for homeownership (whether cultural based or not), you better develop one now, or you and your kids won’t be able to keep up with the immigrants.
January 11th, 2009 at 3:22 am
I was among the first to express concerns about Obama’s economic plan. Apparently a lot of people in Washington share the same view.
>>Congressional Republicans reacted skeptically, just as Obama acknowledged that he would be forced to recant some of his campaign promises given the economic crisis facing the country. Even the president-elect’s own economists acknowledged their two-year estimates could be wrong.
The 14-page analysis, which was posted online, says estimates are “subject to significant margins of error” — because of the assumptions that went into the economic models and because it is not known what might pass Congress.
..
For a second time since his election, Obama increased the number of jobs his jobs program would create, taking the number to as many as 4.1 million jobs saved or created — a benchmark his critics charge cannot be measured. During the campaign, he promised only 1 million new jobs.
..
Obama’s plan has met with lukewarm support from lawmakers in general, despite economic news that has dominated the new administration even before it begins.
..
Obama’s team also noted that with or without the plan, the jobless rate by 2014 would be the same.
..
Democratic congressional officials said his aides came under pressure in private talks to jettison or significantly alter a proposed tax credit for creating jobs, and to include relief for upper middle-class families hit by the alternative minimum tax.
..
evidence suggests that working class families would spend the modest tax credits — $500 per individual or $1,000 per family — on low-cost, imported products that do little for the U.S. economy. He also said state and local governments don’t need as much aid as Obama is proposing.
“They should stick to the infrastructure spending” in the plan and jettison much of the rest, Morici said in an interview, because that is the most likely proposal to provide a short-term economic boost and long-term benefits.
It’s disappointing to see the new administration get off to such a rocky start. With all I heard during the campaign, this is not what I expected.
January 11th, 2009 at 3:29 am
In summary:
1. We don’t need a trillion dollar stimulus plan on top of what we already spent under Bush.
2. We don’t need any useless tax cuts. Removal of the AMT is all we need.
3. Any money spent should be invested on infrastructure projects to create jobs and build America.
Overall, the Obama team missed the objectives by a mile.
January 11th, 2009 at 11:49 am
Beautiful EXECUTIVE HOME for rent! $3600. Imagine the feeling of pride driving up to this driveway every day. Be the envy of your dept at work.
http://sfbay.craigslist.org/pen/apa/981656028.html
Actually in looking around CL I discovered a number of section 8 okay rentals in EPA for $2400 and even more. Had no idea section 8 would pay for a $2400 rental- but anyway since RE is in Palo Alto this must be what he means. There are no section 8s around my area. One EPA section 8 is a 3br/1ba for $2200, thats more than I charge for rent. Whoever owns these things is the classic slumlord I would expect.
The whole section 8 discussion is another clue that low income people actually PAY MORE in many circumstances. People living there in EPA who want a better quality of life should move to my area, but they don’t, its a mindset thing.
January 11th, 2009 at 12:05 pm
I agree with RE about the Obama plan. The stock market is already signaling that this recession will end this year. Another trillion dollar deficit is not what we need now, after Bush spent us into such a hole. People buying cheap chinese goods doesn’t do any good here. If they were going to buy a CAR, then yes that helps but not some Chinese junk. I support spending the money on infrastructure and states, that is a good investment and secondly a 4.5% mortgage refi plan for all including underwaters. Those 2 things would help.
January 11th, 2009 at 12:10 pm
WG, I know landlords who won’t touch section 8 tenants because they don’t want to deal with government agencies; guaranteed income stream be damned. It’s not just a mindset. Section 8ers settle near each other due to word of mouth that the landlords there will take them.
January 11th, 2009 at 1:10 pm
Ok, I concede I missed the point. You were saying that’s the reason one _has to buy_ rather than the reason one actually buys. Unsolicited advice versus objective contribution. My bad.
January 11th, 2009 at 3:10 pm
We need to convince people like Madhaus to start buying American products. I suggest something like this to replace her aging Sienna.
Just look at the reviews. Cars like this will definitely put Americans back to work. There will be a huge demand for mechanics to keep these cars on the road.
January 11th, 2009 at 3:21 pm
…and don’t forget the need for more roadside assistance crew:
To change a tire, crank down the spare while scratching the dashboard with the jack handle. Lie down in the right hand lane of traffic to pull the spare out from under the car. When done, repeat this operation in reverse. Quite efficent in the rain or in 99 degree temperatures.
January 11th, 2009 at 3:53 pm
All
It is this mindset that will prolong the recession. People want to save more so the government has to run a larger deficit to support that. The should do this through a payroll tax holiday but it will end up being a case of too little too late
January 11th, 2009 at 3:56 pm
“The stock market is already signaling that this recession will end this year.”
Gee whiz, WG, if that’s the case, why bother with real estate? Just buy a mess of SSO and make a fortune. Of course, when the DOW’s sporting a 6 handle, that might not seem like such a great plan.
January 11th, 2009 at 3:58 pm
RE, I do appreciate your concern about my old minivan. Your interest so touches my heart.
Now, since I just visited three open houses in South Sunnyvale, why don’t you share your experiences in a bit more depth with us. One of the places I saw was dead empty. I think the Realtard was going to die of boredom. Another was maybe a step below McMansion, and I only saw three other interested parties during my 15 minute tour of the place.
January 11th, 2009 at 4:52 pm
“The stock market is already signaling that this recession will end this year.”
Until earnings start tricking out and the market drops another 20% after the realization hits that the earnings estimates supporting the current market are pie in the sky numbers, which is what a lot of people on the street (including the ones I know) are saying. I still don’t think all the bad news is priced in yet. Buyer beware.
January 11th, 2009 at 5:03 pm
BTW, here is the view of Robert Schiller. Ignore him at your investing peril. He predicted both the dot com crash (and was roundly ridiculed for it) and the housing bubble (for which he again was roundly ridiculed).
From The Times
January 12, 2009
Leading economist fears decade of weakness in US
One of the world’s leading economists has given warning that the United States is facing a decade of financial misery, with the number of unemployed Americans set to continue to rise for years.
Robert Shiller, Professor of Economics at Yale University, who predicted the end of the internet bubble seven years ago, said: “We could have many years of a very weak economy. Big recessions are followed by years of weakness and typically unemployment keeps rising.
http://business.timesonline.co.uk/tol/business/economics/article5496559.ece
January 11th, 2009 at 5:40 pm
One of the world’s leading economists has given warning that the United States is facing a decade of financial misery, with the number of unemployed Americans set to continue to rise for years.
But why stop there? What about a resurgence of the black plague?
The cheap real estate areas bottomed months ago.
January 11th, 2009 at 5:43 pm
Lionel,
Gee whiz, WG, if that’s the case, why bother with real estate? Just buy a mess of SSO and make a fortune. Of course, when the DOW’s sporting a 6 handle, that might not seem like such a great plan.
Simple. Because with stocks, there is almost no leverage compared to real estate. Something that completely eludes the people here.
January 11th, 2009 at 6:22 pm
WG – Leverage is a swear word if you’re risk-adverse. It doesn’t elude them, rather they don’t want to have anything to do with it.
January 11th, 2009 at 6:39 pm
“But why stop there? What about a resurgence of the black plague?”
Your questions implies a certain level of sensationalism in Schiller’s claim. It’s merely the reality headed our way. Nothing sensational about it. An over-leveraged economy is crashing. People without the means will no longer be able to spend more than they can afford, whether the object of their desire be houses or cars or wide-screen TVs. Personally, on a philosophical level, this will be an improvement over the absurd gluttony of over-consumption that’s run rampant over the last decade. No plague, no end of the world scenario, just people living within their means.
PS – SSO is leveraged at 2X. You can find ETFs that track 3X now.
January 11th, 2009 at 6:39 pm
“But why stop there? What about a resurgence of the black plague?”
Your questions imply a certain level of sensationalism in Schiller’s claim. It’s merely the reality headed our way. Nothing sensational about it. An over-leveraged economy is crashing. People without the means will no longer be able to spend more than they can afford, whether the object of their desire be houses or cars or wide-screen TVs. Personally, on a philosophical level, this will be an improvement over the absurd gluttony of over-consumption that’s run rampant over the last decade. No plague, no end of the world scenario, just people living within their means.
PS – SSO is leveraged at 2X. You can find ETFs that track 3X now.
January 11th, 2009 at 7:18 pm
“But why stop there? What about a resurgence of the black plague?”
Right. Let’s go from reasonable predictions to completely unreasonable.
You’ve completely rebutted his argument, WG. Case closed. By likening an entirely reasonable outcome to one that is utterly preposterous his assertion sounds just as preposterous.
The cheap real estate areas bottomed months ago.”
No shit. And the higher end real estate that relies on the lower end (READ ROLL OVER EQUITY) is just now starting – and will be for a while – to feel the pain.
Why do I feel like I’m trying to explain basic economic principles to 3rd graders who don’t speak english?
January 11th, 2009 at 7:39 pm
WG, your rental of the day (#30) is hilarious. Brand new house? Never lived in? What’s with the 1970s carpet in the bedroom shot? It looks like the kitchen cabinets were stolen out of a foreclosure – they’re all different heights and sizes.
The free private school tuition might be attractive for somebody, I suppose…
January 11th, 2009 at 7:47 pm
Not all leverage is the same. When it comes to real estate, leverage allows individuals in many cases (owner-occupied homes in CA) to reap the rewards without the corresponding risk because if the value drops, as we have seen, the owner can walk away without personal liability. Even when that isn’t true, it’s much easier to leverage real estate than it is stocks for a number of reasons.
Real estate can be a great investment, as long as you know what you are doing, meaning you don’t buy property that is overpriced relative to its future cash flow. Meaning you don’t buy anywhere in the “RBA”
January 11th, 2009 at 8:07 pm
Oh, nomadic, you are so particular!
The person who made the listing clearly meant ‘new on the market,’ not ‘newly constructed.’
Personally, I like the iron gates! If I moved there, I could hire an armed guard to patrol the vicinity with the amount of money I’d be saving. Score!
“Meaning you don’t buy anywhere in the “RBA” right now or in the foreseeable future.”
Corrected for posterity.
January 11th, 2009 at 8:12 pm
“WG – Leverage is a swear word if you’re risk-adverse. It doesn’t elude them, rather they don’t want to have anything to do with it.”
Leverage compounds gains and it compounds losses…
Our friendly real estate bulls seem to think that real estate leverage somehow only provides benefits…
January 11th, 2009 at 8:43 pm
Why do I feel like I’m trying to explain basic economic principles to 3rd graders who don’t speak english?
Because you are talking your book, anon. You are stating what you believe. There is almost nobody predicting a “decade of financial misery”. Its just as far out there as the plague.
Wells Fargo economists see recession’s end in late 2009
Dec 19 2008 1:53PM EST
The deepest and longest recession since the 1930s will end in the second half of 2009, Wells Fargo & Co. economists said in their annual forecast.
The third quarter of next year will be âbetter than expectedâ by many, said chief investment strategist Jim Paulsen. âItâs like youâre at a cookout and youâre trying and trying to get your charcoal going and you keep squirting on lighter fluid and all of a sudden it goes âpoof!ââ
Paulsen said âfear mongeringâ by government officials who were trying to sell the $700 billion Troubled Asset Relief Program in the fall made the situation much worse, freezing everyone in their tracks and bringing on âeconomic paralysis.â
Senior economist Scott Anderson predicted that housing will lead the way back. âOne bright note is that the sector that led the economy into this morass is about to turn the corner, perhaps as soon as this summer, and will start to lead us out.â
http://www.portfolio.com/news-markets/local-news/milwaukee/2008/12/19/wells-fargo-economists-see-recessions-end-in-late-2009
January 11th, 2009 at 8:50 pm
“as we have seen, the owner can walk away without personal liability”
That’s an exaggeration. The impact on future access to credit, and access to the jobs that check credit rating, is very real. Better having no credit than bad credit. I even wonder if some apartments might refuse you because you walked away from a mortgage. I do know they check for credit, as I went through this a couple of times myself.
January 11th, 2009 at 8:53 pm
“The deepest and longest recession since the 1930s will end in the second half of 2009, Wells Fargo & Co. economists said in their annual forecast.”
Gosh, you don’t think that Wells Fargo is talking their book, do you? They have a mess of CRE on their books and they are set to take a huge pounding.
January 11th, 2009 at 9:02 pm
From the 12/19/08 WF article posted by WG:
The job market is now one of the worst in decades, with another 3.7 million jobs expected to be lost next year, Anderson said. That means 5.5 million jobs will be lost in this recession, twice as many as were lost in the 1981-1982 recession, the second worst since World War II.
From the 1/12/09 Schiller article:
Last week, official figures showed that the US lost 524,000 jobs in December, with the overall unemployment rate rising to 7.2 per cent — the highest level for 16 years. With about 11.1 million people out of a job, the total number of unemployed is about 50 per cent higher than a year ago.
We can argue a 20-25% difference in numbers based on various sources, but the latest figure is 2x it was a month ago. I think WF made a bad call here.
January 11th, 2009 at 9:27 pm
nomadic, technically the “number of people out of a job” includes “jobs lost in this recession”… and jobs lost not in this recession.
We didn’t start the recession with 0% unemployment.
January 11th, 2009 at 9:39 pm
“Because you are talking your book, anon. You are stating what you believe. There is almost nobody predicting a “decade of financial misery”. Its just as far out there as the plague.”
Ahem, where did I say I agree with his prediction?
The point I was trying to get across is that your response was stupid.
January 11th, 2009 at 9:44 pm
Good point, DreamT. Still, the WF article implies 1.8M jobs have been lost so far compared with the total of 3.7M lost as of 3 weeks later. (Using one year ago as the start of the recession.)
Many people claim those numbers are all wrong anyway, so I’m probably in a losing argument in any case. I’ll be happy if all of this doom & gloom is an over reaction. Personally, I think the economy will begin to recover late next year but unemployment will continue to rise into early 2010.
January 11th, 2009 at 9:47 pm
And if you honestly believe that things will be back to the way they have been for the past 5 years in late 2009…
Let’s just say I’ll be here to laugh at you.
January 11th, 2009 at 9:49 pm
LOL – I said begin to recover. I think when this is all over, everyone will have had an attitude adjustment. At least we can hope.
January 11th, 2009 at 9:59 pm
Wasn’t posting to you nomadic – that was for WG.
Here’s one for the record books:
Book of Anon, Chapter 1, Maxim 1:
Property values in the entire bay area shall continue to decline at least through the end of 2009.
January 11th, 2009 at 10:09 pm
Nomadic, personally I feel that the eagerness of so many companies to abruptly layoff or freeze hiring, all at the same time… can mean several things:
a) They were managed with a zero-day horizon, which explains they all reacted at the same time. Ergo => they reacted pretty much blindly and their action doesn’t give a clue about their performance in ’09
b) They were told to do so by large shareholders and VCs. Ergo => not an actual management decision
c) They played very conservatively and preferred to overreact, along the line of thought that it’s as good a time as ever to lay off the folks less contributive to the bottom line
d) They were over-dependent on short-term cash-flow esp. for their salary. They deserve to fail regardless of the general economy.
So, these are some of the reasons why I think the doom and gloom is exaggerated.
Other reasons include:
* stocks not crashing further through November and December. gas is back above $2
* housing market already rebounded at the low end as WG keeps reminding us
* despite all you read about the economy since about a year and a half, folks STILL BUY houses right now in the south peninsula
* generally, just because folks postpone buying things they think they need but really don’t, like a brand new car or a large TV, would result in companies shutting down, mass layoffs, houses losing 50% in value, rioting in the streets or takeover of California by China… No I just don’t see it. I actually think most homeowners around here were pretty reasonable with credit spending, still have cash or access to cash, are as quick to adjust their lifestyle if needed as the companies that employ them, and job boards still publish jobs daily.
In other words, if this is a bottom, it sure doesn’t feel like it. And yet I have a hunch that many companies reacted overly conservatively.
January 11th, 2009 at 10:32 pm
Lionel, #53: Gosh, you don’t think that Wells Fargo is talking their book, do you? They have a mess of CRE on their books and they are set to take a huge pounding.
when you speak of Well’s Fargo’s CRE on book, are you referring to credit or liabilities? They aren’t always the same thing, ya know. And let’s not even get into all the third graders who don’t realize their credit is someone else’s liability.
anon, #46: And the higher end real estate that relies on the lower end (READ ROLL OVER EQUITY) is just now starting – and will be for a while – to feel the pain.
Why do I feel like I’m trying to explain basic economic principles to 3rd graders who don’t speak english?
Hahahahahahahahaha!
Too bad nobody around here has any training in economics or worked in the field.
nomadic, #57: Many people claim those numbers are all wrong anyway, so I’m probably in a losing argument in any case. I’ll be happy if all of this doom & gloom is an over reaction. Personally, I think the economy will begin to recover late next year but unemployment will continue to rise into early 2010.
Once again, I find myself agreeing with you. You gotta stop being so reasonable.
January 12th, 2009 at 8:37 am
DreamT, I have no doubt that to some extent companies over reacted with their layoffs. They want to get ahead of the losses and usually prefer one big cut than to keep the workforce on edge with frequent cuts.
The companies were basing their forecasts on the outlook from late last year, which was pretty bleak. It doesn’t matter to some degree because all of the layoffs become a self-fulfilling prophecy and erode the economy further.
madhaus. My apologies. I’ll endeavor to be more “nomadick-like” in the future.
January 12th, 2009 at 8:43 am
This article talks about why buying stocks is a bad idea, and how by owning rentals you can gain a steady income in good times or bad. Some excerpts:
Now that the markets have crashed and trillions have been lost, these so-called experts continue on like mindless parrots, saying over and over again, “Polly wants you to invest in a well-diversified portfolio of mutual funds.”
Don’t they know the market has changed? Don’t they know the global economy is contracting, not expanding? Don’t they know their advice is bad regardless of whether the market is expanding or contracting? Doesn’t the general public realize that most financial “experts” are not professional investors? They’re either sales people or journalists — people who earn money via commissions or a paycheck.
I don’t live in some fairytale world with the hope that the markets will right themselves in five years. I don’t keep putting money into a losing venture such as a retirement plan filled with stocks, bonds, and mutual funds. I do not live on false promises. I cannot afford to live on bad advice.
My advice for those seeking financial advice: Look for investments that pay you monthly or quarterly, regardless of whether the markets are up or down or whether the economy is expanding or contracting. Stop listening to those pseudo financial experts with crystal balls and journalism degrees.
Today my wife and I have approximately 1,400 little green houses — each paying us monthly. You do not have to be a rocket scientist or have a Harvard degree to play Monopoly for real. Today’s depressed real estate market is the best time to start buying little green houses, even if credit is tight.
following their advice of putting money into a savings account and investing in a 401(K) is even riskier in this volatile economy.
Today, as the economy is contracting, cash is king. Yet because the Federal Reserve is printing trillions of Monopoly dollars in order to stop deflation, in a few years we could see a hyperinflationary period. Hyperinflation will wipe out the value of a saver’s holdings and eventually destroy most mutual funds as the government begins to raise interest rates in an attempt to stem inflation.
If you do not know what you are doing, no asset can make you rich. Ultimately, what makes you rich is your financial intelligence. Your greatest asset is your brain — so take care of it and protect it from bad advice.
January 12th, 2009 at 8:45 am
madhaus,
Next time, pick the right houses to look at, and go on a Saturday. Serious buyers can’t wait to tour the houses.
January 12th, 2009 at 8:47 am
Hint: Nobody is looking for McMansions in Sunnyvale.
January 12th, 2009 at 9:00 am
“Look for investments that pay you monthly or quarterly, regardless of whether the markets are up or down or whether the economy is expanding or contracting. ”
I agree, but explain to me how buying a house in the RBA that is nowhere near cash flow positive pays me?
January 12th, 2009 at 11:45 am
RE, you left out the single most important part of your article:
I am not actually recommending gold, silver, or real estate. Assets do not make you rich. Assets can make you poor if you are not careful.
January 12th, 2009 at 11:47 am
I think “Mr. Rich Dad” (Kiyosaki) put that disclaimer at the end to keep from getting sued. The comments after that article are pretty funny too.
January 12th, 2009 at 1:20 pm
>>I agree, but explain to me how buying a house in the RBA that is nowhere near cash flow positive pays me?
RBA homes are not cash flow postive from day 1, but time is your best friend.
January 12th, 2009 at 1:26 pm
>>I am not actually recommending gold, silver, or real estate. Assets do not make you rich. Assets can make you poor if you are not careful.
That’s very sound advise. Some people here like to say, so and so bought a house and now they’re under water. Of course, such thing can happen, and nothing is completely risk free, particularly if you don’t know what you’re doing. With real estate, many things are on your side (the government is on your side, time is on yourside, inflation is on your side), but some people interpret this to mean any dumb person can achieve 100% success rate by doing any dumb thing. That was never my position.
January 12th, 2009 at 1:30 pm
“RBA homes are not cash flow postive from day 1, but time is your best friend.”
Or your worst enemy…
January 12th, 2009 at 2:04 pm
>>“RBA homes are not cash flow postive from day 1, but time is your best friend.”
Or your worst enemy…
But it wounds all heels.
January 12th, 2009 at 2:05 pm
I recommend gold. at least a little bit.
January 12th, 2009 at 3:00 pm
(Now don’t y’all go and dig up info on those companies up the peninsula that have genetically-engineered bacteria that poop diesel!)
January 12th, 2009 at 3:04 pm
You’re both wrong. I recommend buggy whips.
January 12th, 2009 at 5:14 pm
I even wonder if some apartments might refuse you because you walked away from a mortgage. I do know they check for credit, as I went through this a couple of times myself.
DreamT, yes indeed. Property management companies won’t touch a recent foreclosee, or any corp rental, because if somebody has recently foreclosed, they can be impossible to evict. In other words somebody can move into your place having recently filed a foreclosure, and never pay rent from day one (although presumably they paid a deposit to get in to your place), and there is nothing the landlord can do about it. Thats the issue.
Foreclosures are expensive and most people who just want to stop paying rent won’t bother with a foreclosure. people who foreclose have assets to begin with, so in normal rental times you don’t have too many renters who bother to screw you with a foreclosure (which would have the same effect, if you rent to a tenant and he forecloses, you as a landlord are screwed). But in this climate you have thousands of former homeowners who have foreclosed, and many of them are subprime so just the type of person who would screw a landlord.
On an individual basis, different story. I rented to a foreclosee a few months ago. I met the people no issues for me. After a while you get a feel for this. And now, 6 mos later their window is closed anyway.
January 12th, 2009 at 5:31 pm
My advice for those seeking financial advice: Look for investments that pay you monthly or quarterly, regardless of whether the markets are up or down or whether the economy is expanding or contracting. Stop listening to those pseudo financial experts with crystal balls and journalism degrees.
I am not a fan of Kiyosaki, and I think his “followers” are about as broke now as the people who followed Abby Joseph Cohen in 1999. But what bothers me about him, even more so than the stock market touts is statements like this, above. people who bought rental properties on his advice at the peak of the property bubble in places like Florida can’t rent those place for a hill of beans, even though they thought they were being prudent at the time.
Anybody can shout out statements like “buy low sell high” and thats what Kiyosaki is doing, the problem is he does it while insulting OTHER financial gurus who basically have the same flaws he does.
January 12th, 2009 at 5:32 pm
gold and oil? Probably the same advice people were giving each other in 1982, which turned out to be the exact wrong thing to do.
January 12th, 2009 at 5:33 pm
RE, you also forgot the second most important part of your article:
My advice is for people who are entrepreneurs or professional investors.
In other words, crooks. Worker bees need not apply.
January 12th, 2009 at 6:12 pm
I even wonder if some apartments might refuse you because you walked away from a mortgage. I do know they check for credit, as I went through this a couple of times myself.
Actually, some employers check the credit history of new hires as part of the background check, especially contractors.
January 12th, 2009 at 6:24 pm
WG said: gold and oil?
Not sure about zanon, but I was being sarcastic about oil. However, the current price level is probably a bit lower than where it will be sustainable over the next year or so, therefore possibly worthy of a look. I haven’t done the homework.
January 12th, 2009 at 6:33 pm
#81 – Read again #52. Yes, I know, you’re lazy to read threads before posting.
January 12th, 2009 at 7:01 pm
nomadic, the thing about buggy whips is they are definitely not making any more of them.
January 12th, 2009 at 7:04 pm
Supply and demand, baby. Supply and demand.
This is econ 101. I can’t see fault with Madhaus’ logic…
January 12th, 2009 at 8:50 pm
well, supply certainly is restricted!
January 12th, 2009 at 8:58 pm
It’s good to see the idea of lowering the mortgage rate to 4.5% surface again. This is probably the simplest, quickest way to rescue the housing market, yet the Obama team has not said anything about it.
January 12th, 2009 at 9:08 pm
LOL – are we supposed to log in to your account to read the article, Roger?
January 12th, 2009 at 9:14 pm
LOL.
moron.
January 12th, 2009 at 9:19 pm
Good golly, 5 minutes later I’m still laughing.
Does roger retard think he’s qualified to do anything?
Talk about added value… lol
January 12th, 2009 at 9:34 pm
he’s just basking in the knowledge he made us look!
LOL
value added = 5th-grade humor
January 12th, 2009 at 9:35 pm
Here’s the link:
http://abcnews.go.com/WN/Economy/story?id=6629756&page=3
Sorry for the mistake (you won’t hear this line from Pralay or madhaus).
January 12th, 2009 at 9:38 pm
Wow, Roger, every time I think you can’t be any dumber, you surprise me.
January 12th, 2009 at 9:43 pm
RE, you linked to page THREE. nice.
January 12th, 2009 at 9:46 pm
Guys,
Ever wonder what happened to Pralay? I have a feeling he’s caught in the Satyam scandle.
January 12th, 2009 at 9:47 pm
Interest rates on page 3. Okay. This part of page one is priceless: The Hirschis decided to sell their home when gas prices shot up last spring and they wanted to be closer to Heath’s office. Moving would save gas money on the 25-minute commute, and Betty could work from home.
So, to save a whopping 25-minute commute they will move. That’s gotta have about a 1,000 year ROI.
January 12th, 2009 at 9:48 pm
>>RE, you linked to page THREE. nice.
That’s the intent, since it’s where the article talks about the 4.5% interest rate.
January 12th, 2009 at 9:51 pm
where’s the sense in this????
“We want a mortgage whose payment goes down in bad times and they go down automatically,” Shiller said. “You don’t have to go and fill out forms from a bank; you don’t have to say anything. It’s common sense, actually.”
January 12th, 2009 at 9:52 pm
I think Pralay got tired of you. Do you miss him?
January 12th, 2009 at 9:55 pm
madhaus,
Have some understanding for someone who multi-tasks. I’ve got 20 windows open on my computer and kids requiring my attention.
January 12th, 2009 at 9:58 pm
nomadic,
I noticed that Pralay disappeared on the exact day news about Satyam broke.
January 12th, 2009 at 9:58 pm
RE, I am sure your boss understands completely that you’re incapable of doing your job.
January 12th, 2009 at 10:05 pm
Schiller is advertising for that “crisis built in” type mortgage where a job loss or some crisis allows people not to pay for 3 mos or something and not lose the house. His rationale is that every economic recession for the last 30 years has led to millions of foreclosures that are a fairly new phenomenon with no more lifetime employment. 30 year mortgages were devised when lifetime employment was the norm. Schiller thinks that mortgages that have a crisis clause would ultimately help recessions end faster etc. Sounds reasonable to me as long as banks don’t package this as some kind of expensive option. Maybe congress should mandate it for all mortgages.
January 12th, 2009 at 10:09 pm
How about the idea that one should live within their means to the point where they can pay a couple months mortgage without working?
There’s a novel idea.
January 12th, 2009 at 10:14 pm
anon,
WG laid out a good case. Look at how long DreamT was out of a job. Imagine if he lives in Phoenix.
January 12th, 2009 at 10:50 pm
For the real estate investor
clownsprofessionals…“California has a complicatedstatutory right of redemption after the foreclosure sale has occurred, which would allow a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs one (1) year after foreclosure sale unless the original lender made a full price bid then that period is shortened to three (3) months. A borrower does have ninety (90) days after the recordation of a notice of default to cure any default and this is commonly referenced as the redemption period although it is not a true statutory redemption. Junior lien holders cannot redeem. There is no statutory right of redemption if a deficiency judgment is waived or prohibited at the time of which effectively negates any possibility of a redemption occurring in the scenario noted above.”
January 13th, 2009 at 1:20 am
How’s my 4-month hiatus any relevant to placing one’s mortgage on hold? Incidentally I called my mortgage company back in July in case I’d ever need to suspend payments, and they were quite ready to suspend immediately for three months, so this system is already in place without having to write laws for it. I didn’t do it since I didn’t need to and it would have affected my credit.
January 13th, 2009 at 9:09 am
Au contraire, madhaus…. : )
January 13th, 2009 at 9:25 am
The Schiller concept is not what California has. California just says you have 3 mos to move out, basically. If you want to stay you need to go back to current which is pay the 3 mos mortgage payments in arrears, which nobody can do in that situation. What Schiller wants is something where twice in the lifetime of the loan or something you can call and have your mortgage “delayed” where it just accrues with no required payments for a few mos.
DreamT- do you have a mortgage with a major bank that allows this? Can I ask which one? I don’t believe Wells allows you to miss a payment on a fixed loan, and if you do miss a payment you need to make yourself current within some period or else the foreclosure process will be initiated.
January 13th, 2009 at 9:28 am
WG – Countrywide. They offered to suspend three months if I wished and gave me a number to call if I ever wanted to initiate that process, but recommended not to do it unless I was ready to see an impact on credit. I suppose they wouldn’t offer this if you had bad credit or no history with them.
January 13th, 2009 at 10:10 am
“California just says you have 3 mos to move out, basically. ”
No. California says that you have 3 months to make yourself current on your payments.
January 13th, 2009 at 10:20 am
So, if you have available what dreamT mentioned, you could delay things at least 180 days.
Call up mortgage company, have them suspend for 3 months. After three months, continue nonpayment. Wait for notice of default (a month?) then make good on payments 90 days later.
180 + 30 = 210.
210 days is 7 months. You want more?
January 13th, 2009 at 10:52 am
anon, please, quit arguing this straw man. It is completely different to give you 3 months off but then, at the 4th month require BACK PAYMENT of the lost months. Obviously nobody who loses a job is going to be able to come up with the 10K or whatever to make the arrears current. The issue is making yourself current.
I don’t even support this proposal because i think it will add to mortgage costs. But those of you that think Schiller is a genius should at least try to understand it.
January 13th, 2009 at 10:58 am
Prof Bleen, re #108: That’s a buggy whip repair company. You have to have one in order to get it repaired. And you can’t compare a historic reproduction to an original 1853 buggy whip, either. Heck, I want the buggy whip personally used by Joaquin Murietta.
And when I get it, we can use it on Schiller and find out whether his idea means paying current or readjusting the loan including missed payments.
January 13th, 2009 at 11:00 am
LOL.
It’s not a straw man, I’m explaining to you how you can manipulate the system to the same result.
Can’t come up with 3 months of mortgage payments over the course of 7 months to make yourself current? You’re over your head with respect to your mortgage and shouldn’t be there anyway.
Here’s a straw man for ya: Everyone knows that people in the bay area are so smart that they can figure out how to make mortgage payments with or without a job so this is a moot point anyway.
January 13th, 2009 at 11:13 am
anon, that cannot be possible. Nobody in the RBA would get a Pay Option ARM and allow themselves to get that far behind when the loanrecast. If it did, though, a quick trip to Kleiner Perkins is all it takes; raise a hundred mil on one of their spare startup ideas. Problem solved!
January 13th, 2009 at 11:16 am
Madhaus, Schillers proposal is to extend the loan by the 3 months, which is my issue with it because it then means in order to support this you need to price every mortgage for 366 months, assuming the plan is to offer 2 3-mos hiatus periods, vs todays pricing which is 360 mos. IOW the mortgage company eats it.
The problems with this are that most mortgages are paid off in 7 years so the chances of somebody like me even when I was younger actually using those hiatus periods is fairly slim. But if this was mandated I would be paying for it. It would be more valuable in the more static areas of the country where people don’t move and pay off their mortgage. Or in the mfg areas where people are laid off and rehired.
January 13th, 2009 at 11:23 am
WG, you got a decent link to Schiller’s proposal? I’d like to take a good look before I make a serious comment (for once).
Is it really reamortizing as a 366 month loan, or as a 360 month loan with some interest-only periods (that the mortgage company then writes off)?
And are you seriously suggesting that you’re opposed to this plan only because it won’t benefit you personally? I would think that not having a bunch of foreclosed homes all around your rental empire would be in your interest as well.
January 13th, 2009 at 11:32 am
I am opposed to it because I think it will raise costs for mortgages while benefitting certain areas of the country disproportionately. If they do it and mortgages stay where they are pricewise, I think its a great idea. Basically, when all is said and done and they put this in, I suspect you will see when you run a report that the people that really USE these hiatus periods, assuming they were mandated would be in low cost areas of the country like Detroit. Bay areans pay off their mortgages and tend to have reserves. Not that I don’t want to help the less fortunate, but for years the expensive parts of the country have subsidized the poorer areas, the entire “conforming loan limit” scam being the centerpiece of it.
I heard Schiller on NPR talk about his plan, I will try to find it somewhere but just doing a google search brings up all kinds of stuff. I will post it if I can find it.
January 13th, 2009 at 12:32 pm
I am opposed to it simply because homeownership should not be subsidized. If they want to allow “hiatus” periods, then the P&I for those missed payments should be tacked on to the principal of the loan. No write-offs. The borrower can pay it back when they sell, refi, or in payment numbers 361-366.
Yeah, I’d even be open to ending tax breaks if they were going to be fair/equitable in other ways too.
January 13th, 2009 at 12:53 pm
When you do a lot of traveling to 3rd world countries, where mortgages for regular people are unavailable, it makes you reassess this “tough love” stance on govt subsidized mortgages.
January 13th, 2009 at 1:48 pm
I think allowing people an extra three months to pay off their debt is pretty reasonable. It’s not like we have debtor’s prisons or anything.
Folks need to take responsibility when they sign up for 30 years of payments.
January 13th, 2009 at 1:54 pm
I think allowing people an extra three months to pay off their debt is pretty reasonable. It’s not like we have debtor’s prisons or anything.
Oh don’t worry, nomadic, we will. The Brazilification of the US is a real concern of mine. Seriously, look into the privitization of government services such as the military, prisons, and Veterans’ services. Debtors’ prison is a perfect tie-in with the draconian bankruptcy laws favored by banks that hurt consumers yet let corporations do whatever they want.
Sorry. I guess I’m sounding like an angry renter today. I’m going to go admire my Prop 13 valuation now.
January 13th, 2009 at 1:59 pm
Yeah, if you move someday, be sure to budget $1,000-$1,500 per month for taxes so you can subsidize the old farts next door.