November 6, 2010

What’s Worse than Foreclosure? Submarine Mortgage Payments

Written by madhaus – but due to a quirk in WordPress I can’t change the author.

Faithful mortgage payments may hobble economy

By Don Lee, McClatchy-Tribune
Posted: 11/04/2010 02:21:32 PM PDT

WASHINGTON — For almost two years, home foreclosures have swept the nation, spreading misery among once-buoyant families, spattering lenders with red ink and undermining efforts to restart the economy.

But a bigger problem may turn out to be the millions of Americans who are still faithfully paying their mortgages, but on houses worth far less than before the bubble burst. It’s not that these homeowners will stop making their payments. It’s just the opposite — that they will keep doing it.

How could that be a source of future trouble? Because, with home prices stagnant in much of the country, payments on mortgages that are underwater could absorb billions of dollars that might be used for other forms of consumer spending — a drag on family finances, the housing market and the overall economy.

And the drag could persist for years.

That’s right!  Continuing to pay your mortgage every month when your home is underwater is UN-AMERICAN!  You’re THROWING MONEY AWAY that could be jump-starting the economy.  Instead of buying a gas-guzzling SUV or taking your entire extended family to Hawaii, you’re paying the bank more than your house is worth or may ever be worth again.

7.8 million mortgage holders owe 25% more than their home is currently worth, and 4 million (including 672,000 in California) owe more than 50% of their home’s value.  And these loans are at far higher interest rates than the current national average mortgage rate of 4.25%.  These people can’t refinance, because their homes won’t appraise high enough to retire the old mortgages.  They can’t sell for the same reason: it won’t cover the debt.  They don’t give the homes back to the banks because they don’t want the black marks on their credit ratings.  They can’t even qualify for loan modification, because they’re still employed.

They’re stuck, and the entire economy is stuck with them.  All these people stuck in their repriced homes means fewer real estate transactions, fewer real estate commissions, fewer trade ups to bigger homes.  And that means housing prices everywhere will stay stuck, as will consumer spending and job creation.

If only they would just stop paying their mortgages until the banks finally notice.  They could probably get at least a year’s free housing before those busy robo-signers take note.  Maybe Danielle and Jim Earl could give them some pointers on how to stay in the house as long as possible.

Really, which is worse: a foreclosure on your credit report, or paying 10 or 15 or 20 years’ worth of mortgage payments until your house is once more worth what you paid for it in 2006?  After all those financial shenanigans during the bubble, being foreclosed on won’t be any more of a stigma than getting divorced or laid off.

Do you owe more than your home is worth?  Then stop paying your mortgage.  The entire country is counting on you!

Comments (7) -- Posted by: burbed @ 5:05 am

June 20, 2010

Letters, We Get Letters

full mailboxHere’s another guest post from madhaus, who noticed that burbed has been letting the mail pile up.

Hope you’re all enjoying your weekend, although some of you are working two or three jobs each to afford living here.  Then again, I better not assume all of you have jobs either!  That’s the fun of living in the Real Bay Area in 2010.  It’s so Special here, nobody has any idea whether you just made ten million in stock options or minimum wage at the yogurt shop.  Unless you wear your YoGoGoGo apron to Open Houses.

So this is a great time to catch up on some reader mail!  Let’s dig into the ol’ Inbox and see what our Readers have to say!

Dear burbed, Am I on the air?
— Nervous

Yes.  Do you have a question?  Rats, Nervous hung up.  Readers, don’t email unless you want an answer.  Let’s go to our next entry.

Dear burbed, I make about $120K a year working at [company withheld].  I saved up $80K for a down payment, and I could tap into my 401K if I had to, there’s about $60K there.  What can I afford that will give me the best value?  I don’t have kids so school district doesn’t matter.
–Now is the Time

Dear Now, of course school district matters.  You’re asking the wrong question.  Instead of asking about value, you should ask about preserving your investment.  Buy in the best school district you can afford. In your case, I think that would be Hemet.


Comments (12) -- Posted by: burbed @ 5:01 am

May 21, 2010


Thanks to Burbed reader madhaus for this guest post!

309 Beach Drive,  Rio Del Mar/Seascape CA, 95003

309 BEACH Dr Rio Del Mar / Seascape, CA 95003

Beds: 5
Baths: 3
Sq. Ft.: 1,776
$/Sq. Ft.: $247
Lot Size: 4,791 Sq. Ft.
Property Type: Detached Single Family
Stories: 2
View: Ocean
Community: Rio Del Mar/Seascape
County: Santa Cruz
MLS#: 80709410
Source: MLSListings
Status: Active This listing is for sale and the sellers are accepting offers.
On Redfin: 1172 days


Nothing says “this property’s going up on Burbed” like a description in ALL-CAPS. Refusing to turn off the CapLocks key leaves a potential buyer feeling like they’ve had a megaphone shoved up an ear.  Maybe the agent used to work at Western Union composing telegrams, because I don’t see the period key except for an abbreviation.  So while we’re deafened by the approach, let’s look at what we’re being offered.
Well, whatever the offer is, it’s overpriced, even for a beach house that’s across the street from the beach.  How do I know this?  Simple:

On Redfin: 1172 days

1172 days?  As in three and a half years? Is this a record?   I don’t know, but Should I wait for a price reduction?



I’m not sure.  According to this graph I should wait 28 more days, and then wait for 40 price reductions.
And remember, if the agent can’t think of anything better to say than “MAKE MEMORIES WITH YOUR FAMILY AND FRIENDS,” then you know the property has a problem.  And in this case the problem is you are not being sold a beach house.  You are being sold a 20% share in a beach house.  And that means that you get the house on Tuesdays and every third Wednesday.

Still want the house?  It’s in a flood and a fault zone!  Too bad the nuclear plant’s in another zip code.

Comments (89) -- Posted by: burbed @ 5:46 am

May 18, 2010

Needs Some TLC… and Equity

For Sale (MLS-listed)


3238 AGATE Dr Santa Clara, CA 95051


Beds: 3
Baths: 1
Sq. Ft.: 1,040
$/Sq. Ft.: $327
Lot Size: 6,500 Sq. Ft.
Property Type: Detached Single Family
Stories: 1
Year Built: 1955
Community: Santa Clara
County: Santa Clara
MLS#: 81014108
Source: MLSListings
Status: Active This listing is for sale and the sellers are accepting offers.
On Redfin: 39 days



The above description does not do justice to this property.  If a home is a contractor’s special, why do you have to see it?  Fire up the bulldozer and plonk down a McMansion!  But that only works in the RBA.  If tthe whole street is full of crapboxes, there’s not much point in putting lipstick on a pig.
And here’s what the place looked like when the GoogleCam drove by.  Do you think the agent took one look and said “Mr. Seller, tear down that fence!”

There was a time when this property sold for more than $339,900, and I only say this because nobody wanted to buy it for $359,900 a month ago.  Even noticed when this lovely home went for… $600,000???   Just about four years ago.  My, how time flies!  Now the bagholders passed the bag to the mortgage company, who sold it for $360,000 in early February — to other banks.
But no matter how quickly Silicon Valley’s economy comes back, this place will never be in the RBA.  Look what’s it’s conveniently located next to.
Yes! CalTrain right across the street!  And someone bought this place for $600,000.  It’s the people who sold it in 2006 who were geniuses.  They paid $24,000 for it in 1971.
And here’s what burbed had to say about this and all the other overpriced crap on the market:

Ah… to have bought a place in California before 1980. Better than working.

Nothing like the ol’ generational transfer of income. Massive mortgages, peak oil, falling incomes, implosion of social security – interesting times ahead!

Nobody could have predicted!

[Thanks to Madhaus for this guest post.]

Comments (44) -- Posted by: burbed @ 5:52 am

May 17, 2010

Two Years Later, Who’s in the RBA Now!

And now, a guest post from Madhaus. Pretty thought provoking!

Two Years Later, Who’s in the RBA Now!

Just about two years ago, burbed ran this post, picking up my comment predicting which Special places in the Bay Area were going to become a little less Special.  Home prices in income-challenged regions of the Bay Area had been crashing for more than a year, and foreclosures were starting to mount in far-flung exurbs such as Stockton (and closer ones such as Gilroy).  But most in the Real Bay Area thought they were immune from the oncoming tide of equity retreat.

With my battle cry of “Here’s my prediction of which areas will be removed from the RBA next, in order, with RBA defined as ‘where prices never go down,’” I invite you to Real Bay Area, Then and Now!

And the surprising conclusion?  Only ONE ZIP CODE remains in the RBA.  That’s right.  ONE.  And it’s in Palo Alto!

td valign=”top” width=”108″>565


Locale 2008 $/sf 2010 $/sf Annual % change
West Redwood City 94062 $576 $499 -6.9%
S. Santa Clara 95051Maywood Park/CUSD $465$796k $348
South Sunnyvale 94087non-CUSD
Central Mountain View 94040 573 550 -2.0%
South Mountain View 94041 644 572 -5.8%
Willow Glen 95125
redfin neighborhood
468 350 -6.4%
West San Jose CUSD 95129 567 485 -7.5%
Los Altos 94022 764 649 -7.8%
Cupertino 95014east of Bubb
west of Bubb
Los Gatos 95032 572 457 -10.6%
Los Gatos 95030 719 603 -8.4%
West Menlo Park 94025
actual Redfin neighborhood
793 724 -4.6%
Palo Alto 94303Midtown 706
Palo Alto 94306 580 724 +11.7% (!)
Saratoga 95070 671 559 -8.7%
Palo Alto 94301 907 801 -6.0%
Los Altos Hills 94024 739 647 -6.4%
Woodside 94062 847
Portola Valley 1,060 648 -21.8%
Palo Alto 94304 1,070 771 -15.1%

Zip code $/sf data from redfin, comparing April 14, 2008 with April 12, 2010 sales prices per square foot.  If a neighborhood is unrepresentative (read: way more Special) of its ZIP code, I picked a house in the neighborhood and compared Zestimates for the beginning of May 2008 and 2010.  Yes, completely unscientific and unrepresentative, but until Redfin lets me pick a neighborhood by school district, or pick a neighborhood that has a name they don’t want to acknowledge, tough.

Wasn’t that a surprise?  The fairest ZIP code of them all is South Palo Alto.   Who knew?  South Palo Alto 94306 – up an incredible 11.7% annualized!  Yes, scraping tiny homes off small lots and replacing them with McMansions pays off!

And let’s have a round of applause for our lovely runners-up, those areas that lost less than five percent annual value in the last two years.  Yes, two years, so you have to more than double those percentages to figure out how much value the average house lost!  Here they are, the lucky ducks!

  • · Central Mountain View 94040 -2.0%
  • · South Sunnyvale 94087 -4.1%
  • · West Menlo Park 94025 -4.6%

Sorry North Mountain View (94043), you’re only down -3.3% a year, but you never were in the RBA in the first place.

Many predictions were made in 2008.  Discuss.

Comments (26) -- Posted by: burbed @ 5:25 am

May 14, 2010

Drought? What drought? Wash your car twice!



Beds: 3
Baths: 2
Sq. Ft.: 1,406
$/Sq. Ft.: $640
Lot Size: 6,254 Sq. Ft.
Property Type: Detached Single Family
Style: Ranch
Stories: 1
View: Neighborhood
Year Built: 1961
Community: Cupertino
County: Santa Clara
MLS#: 81020758
Source: MLSListings
Status: Active This listing is for sale and the sellers are accepting offers.
On Redfin: 11 days
Gorgeous home in nice neighborhood- Upgraded kitchen w/ maple cabinets, grantnite slab counters, and built-in microwave oven. Recessed lightings. Copper pipes. Dual pane windows & sliding door. Hardwood flooring in living room, Laminate flooring in kitchen & dinning room. Fire Place in living room. Updated all doors. Top Cupertino schools Homestead/Cupertino/West Valley. Easy access to 85/101/280.

Thanks to Burbed reader Madhaus for this guest post. Take it away, Madhaus!

Drought?  What drought?  Wash your car twice!
Admittedly, this is not the year Northern Californians are worrying about water conservation, but it’s only a matter of time before the reservoirs are 20% full and we’ll be calling out Southern California again for stealing our water.  What’s felt like a rainy year is merely 116% of normal San Jose rainfall, and most of our reservoirs are below capacity.

So if you’re worried about buying a new house just for the privilege of watering your own lawn, and then not being allowed to use any water, here is the perfect home for you.

clip_image001You’re probably wondering where the house is in the photo above.  No problem, here’s the “cover photo.”  I just wanted you to admire all that greenery and wonder how you’d keep it that way if we have another low rainfall year.  You could do some “hardscaping” and cover the front lawn with low-maintenance asphalt.  It will look a lot like the photo anyway, since this Realtard wouldn’t invest in a wide-angle lens and took the photo from the sidewalk across the street.
Or, you could take advantage of a terrific feature not called out in the property listing.  Yeah, yeah, yeah, the place has a shower over tub, a dishwasher, sprinklers — although those sprinklers won’t do a lot of good if your water gets rationed.  Are those Real Cupertino Schools going to make up for an eyesore like a dead lawn?
A number of people are going to drive over to check out this property, and most of them are going drive away even faster.  This house has “Easy access to 85/101/280.”  And by easy access, they mean just steps away from 85 and 280!  Just steps!  Close your eyes and pretend you’re hearing the seashore!  And the part about 101?  Well we all know Realtards like to stretch the truth a few miles.
Okay, okay, so there’s a few too many freeway ramps near the property.  But do you see those big white circles?  Those are WATER TANKS.  A humongous water tank right across the street from you!  Plus a spare!  Are you thinking what I’m thinking?  Are you handy with tools?
Plus, think of all the shade you’ll get on those hot summer afternoons!

Comments (29) -- Posted by: burbed @ 5:24 am

May 4, 2010

Not Inherent Value

Listed at: $650,000
Beds: 2
Baths: 1
Sq. Ft.: 734
$/Sq. Ft.: $886
Lot Size: 10,143 Sq. Ft.
Property Type: Detached Single Family
Style: Victorian
Stories: 1
Year Built: 1929
Community: Willow Glen
County: Santa Clara
MLS#: 81012515
Source: MLSListings
Status: Pending Without Release This listing is in escrow, past inspections and waiting for loan funding. “Without Release” indicates that the current buyer doesn’t need to sell a home to buy the new home.
On Redfin: 46 days
Check out this wonderful lot. Dimensions are appx. 69 x 147sf or 1/4 acrew. Existing houseon lot is older and has not inherent value. Build your dream home as the market for custom homes is great. Builders can alos see the upside down. Please be careful if you want to go into the house. Take your time and walk the lot.

Thanks to Burbed reader Madhaus for this find and guest post! Here it goes:

This property has a number of things going for it.  First of all, this older home has “not inherent  value,” which is better than having no inherent value.  Second, it claims to be in Willow Glen, which, like the RBA, can expand to fill the entire 95125 zip code, or contract to the corner of Willow and Lincoln.  The northwest corner.  And third, it’s being shown by the prestigious Realtards at Alain Pinel, so you know somebody is paying top dollar to move this pile of wood. But best of all, despite the snooty pretensions of the agency, here’s an ad for an older home (if eighty years is older, I’d hate to see what they call “decrepit”) with so many typos, were this a ninth grade essay I’d be giving it a D and I’ve only read the first paragraph.  Shall we have a little fun?  We shall.

Check out this wonderful lot. Dimensions are appx. 69 x 147sf or 1/4 acrew.  Oh dear, somebody misspelled
Existing houseon lot is older and has not inherent value.  houseon lot?  Don’t they mean housing lot?
Build your dream home as the market for custom homes is great.  Especially during an economic downturn
like nothing since 1933.
Builders can alos see the upside down.  Whoops, misspelled ‘alas.’  As in, ‘Alas, I
can see the upside down.’
Please be careful if you want to go into the house.  since you may never be seen
again due to the sinkholes, especially the sinkhole your equity is headed for.
Take your time and walk the lot.
Yes, indeed, take lots of time.  Maybe wait about six years until you make an offer on this place.

Somebody didn’t take their time.  It’s pending.  I hope they were careful when they went in the house.

UPDATE: Fixed an editing error.

Comments (14) -- Posted by: burbed @ 5:25 am

April 29, 2010

$300,000 for a Water Meter

Thanks to Burbed reader madhaus for this guest post!

Everyone knows construction costs in the Bay Area are “through the roof” because it’s so Special here.  What everyone did not know is that some places are so Special that it will cost more for a water meter than a house almost anywhere else.

image Bolinas is north of San Francisco, but the residents don’t want you to find them.  The state has given up replacing any direction signs to the town, because they keep getting torn down.  And even if you can find your way there, don’t plan on moving into a new house.  There are exactly 580 water meters allowed in Bolinas, and they don’t come up for sale very often.  No water meter, no new construction.

One is coming up for sale very soon, and it’s going up for auction.  Minimum bid: $300,000.  It’s for sale because a the town, aided by billionaire venture capitalist Michael Moritz, bought a house that burnt down and is turning the lot into a park.  The auction ended Friday, April 16th, after this NY Times article was published.

For most of the last 39 years, “the only way a water meter came free was when a house burnt down, or fell off a cliff,” said Barbara Rothwell, a longtime Bolinas resident.

The meter moratorium has survived, even through protracted litigation, with the support of residents who like this isolated town the way it is.

The last water meter to come up for auction was in 2005, and it sold for $310,000.  Now, that’s Special!  How are your Special communities keeping out the riff-raff?
Incidentally, don’t you think The Bolinas Water Meters would be an awesome name for a rock band?


Update, 4/20/10:  Nobody submitted a bid for the coveted water meter. The deadline has been extended another week, ending on Friday April 24th.

Update, 4/28/10:  No bidders on water meter, auction extended to May 14th

Your chance to get a rare Bolinas water meter has been extended to May 14.

“We want to give people more time,” said Flower Fraser, owner of Seadrift Realty, who is ready to collect the bids.

The original deadline was April 16, then was extended to Friday and now until mid-May. Seven parties have inquired about the meter, but no one has submitted a bid.

Maybe some properties outside the RBA aren’t all that Special.

Comments (20) -- Posted by: burbed @ 5:16 am

April 18, 2010

Keeping it Real – Real Bay Area that is!

Thanks to Burbed reader madhaus for this guest post!

burbed reader SEA listed a few uses of “real” recently: Real Bay Area, Real Houses, Real Resident, Real drop in price, Real Buyer, and Real Home.  Goes on to wonder if there is a “real seller”  and if so, what would that be?  And reader nomadic responded: “Real Sellers never drop their price.  They wait patiently for ‘just the right buyer.’  After all, it only takes one!”

There’s plenty of uses for “Real” in this Real Special place we live.  All those hillside homes, we can find out the lot square footage, but what’s the Real Square Footage — the land you can actually use instead of slide to the bottom of your property line?  And how does the word “Real” makes almost anything better?

Real (adj.): Smaller, more exclusive, superior.  Way more Special.

So, watch the RBA get more concentrated and more special as time marches on.  Here’s burbed’s original Real Bay Area map:
Good, but needs a bit more detail.  So I came up with this a couple of years ago:

Well, it’s time to update the map, boys and girls!  Let’s see how things are looking in April, 2010!

Looks like the RBA has traded down!  Former RBA could soon be part of the Corridor of Not Quite!  And “Real” continues to be defined as getting smaller but better all the time!

Comments (130) -- Posted by: burbed @ 5:24 am

April 12, 2010

With Real Cupertino Schools

Thanks to Burbed reader Madhaus for sending in this guest written post. Here it goes:

901 Cascade Drive — With Real Cupertino Schools

Here’s another typical overpriced house in a “special” zip code.  What makes 94087 so special?  Some of it has REAL CUPERTINO SCHOOLS!


Can you think of anything else to explain the price these sellers are asking?  $1.15 million?  (Whoops, cut to $1.099 million!)  AS IF!  The last $1.15 million sale in this tract went down in Spring, 2008, which just happened to be the local market peak.  And the property was on a 9500 square foot lot!

Let’s take a look at this one.  Oops!  Not quite as generous, is it?


Oh, dear, that looks like quite a busy street only one house away.  Oooh!  Looks like this house is on the corner of a couple of arterials! Well, let’s go inside, shall we?

The original design in this tract is an L-shaped 4/2 with a large living room.  901 Cascade has had some remodeling done in the 1970s.  The garage was turned into a room with a half bath and a laundry room off it.  Since the new space was set up as a formal living room, the effect of these

utilitarian offshoots is jarring.


Here’s a view of it that cleverly leaves out those rooms that don’t belong.

A free-standing garage was built next to the front bedrooms, ensuring little sunlight.  A continuous roofline/gating thing connects the garage with the former garage, giving the house some unity of concept but hey, it’s still an awful shade of olive green.

The smallest front room had a doorway (not a door) installed from the entrance hallway and is used as a piano room.  The two rear bedrooms, including the master, were extended five feet into the back yard, so they don’t seem as pitifully small as the front rooms are.

The hardwood was nicely done throughout.  Homes in this 1956 tract do have hardwood floors, usually covered with carpeting.

The kitchen made no impression.  Probably not enlarged at all but the appliances are newer than 1980.


The front shared bathroom appears to be either the fifties original or a very old update.  The master bath was enlarged to replace the tiny shower with a smallish jacuzzi tub.  The tiling looks old and feels dated.  Well, what do you expect, with a remodel done in the early 1970s?

The agent is from Willow Glen (clearly a wanna-be ZIP who doesn’t know about Special) and obviously doesn’t know this neighborhood.  Yes, it has REAL CUPERTINO SCHOOLS, but even so, this is overpriced. Corner undersized lot, too close to Mary Avenue, schools threatened with layoffs and severe budget cuts, 2008 peak sale of 1.15m was on 9500 sf lot on quiet street.  Agent admitted this Green Home was listed for $1.2m last summer and the sellers didn’t get the price they wanted: 1.15m.  Now they’re just asking for it up front.

Not many other visitors, either, just 2 couples, one when we arrived and one as we left.

Evidently the agent decided to drop the price after a month of no “serious” offers, and now it’s Pending Without Release.  Given that only ePraisal estimates this home as being worth anything remotely near that, do you think those those REAL CUPERTINO SCHOOLS will keep adding as much value as they had?


Comments (31) -- Posted by: burbed @ 5:38 am