Inconceivable!

George W. Bush has today recommended the inconceivable. He is proposing new legislation to bail out the financially inept Americans who, when buying the home of their dreams or investment property utilizing the riskiest of finance methods, viewed the reading, understanding and questioning of contactual fine print of the most massive financial obligation they'll ever make in their lives as "meh, that's not important".


Don't show me that! Show me my new freaking house!

Well, apparently guns were put to the heads of these individuals as they signed off on "no down payment", "sub-prime", "adjustable rate and/or interest-only loans". Did they care about long-term affordability? Fuck no. They just wanted into the club, slamming down their cash on to the proverbial Las Vegas roulette table, because interest rates will go down in the future. They MUST go down in the future!
And besides, my Realtor told me "you can always refinance in the future".

This move to legislate away the collossal financial fuck-ups of these morons sends the wrong signal. To everybody.

Now it's OK to throw reason to the wind. You don't have to pay back your mortgage!

Instead of renting a single family home, I should go out there and load up on a $650,000 single family, 3 bedroom, 2 bath piece-of-shit cement box house in Orange County, sign up to a two deed of trust, adjustable-rate mortgage and make it all mine! And if interest rates go up in the future, the loan adjusts and my house payments go from $1,999.99/mo to $4500.00/mo, then fuck it! I'll just call up California Senator's Barbara Boxer or Dianne Feinstein. They and 350 million American taxpayers will surely "pick up the tab", help me keep my house, and bail me out, because I'M A FUCKING ARROGANT MORON!

Hell, why not just go to my bank, withdrawal all of my money, spend it all on lottery tickets and hookers, then put in for a tax-payer bail out?!

Meanwhile lending standards are tightened across the nation, the cost of borrowing for all sorts of loans in America goes up for everyone, and uncertainty rages in the financial and currency markets.

AND - hey, I thought I'd save the best for last, Rancid Truth readers - your federal and income tax bill goes through the freaking roof, courtesy of that financially inept neighbor just down the street!

And you thought they had such a nice flower garden!

The Senators, Congressmen and President want some sort of "pat on the back" for sticking it to the American taxpayer.



Do Americans seriously wonder why this country is going to hell in such a gaudy handbasket?

Write you senators now and implore them to stop this insanity and reject any such legislation proposed by Bush, Shumer, Shelby, Dodd or Clinton.

Look, it's not because America is without compassion. But let's agree to establish a new rule. Let compassion and bail-outs be reserved for those who really need it - the poor, the uneducated, the sick, the elderly, those that cannot defend themselves.

Ms. Pat Vreedevogd-Combs of the NAR

Proudly cheerleading Americans into Homedebtorship, Foreclosure and Taxpayer Bail-Out

It is morally wrong to bail out "housing gamblers" (a.k.a anyone who believed the words of Realtors or mortgage lenders the last 7 years) with the money of hardworking taxpayers and voters who, instead of believing the National Association of Realtors (nice commendation, Ms. Combs) , chose to live within their financial means.

I would advise readers of Rancid Truth to write the malinformed President of the United States, but he has the unfortunate impairment of being unable to read, and unable to change his mind once he fucks something up so badly and beyond all recognition. But if you voted for George W. Bush and you believe he will listen to you, then don't let me stop you.

Hell, we should try everything at this point, and that includes anyone who chose to slap a "W in 2004" bumper sticker on their SUV.

NAR: Realtor ranks to decline 4% in 2007

Now that the easy mortgage money is flowing like mud around the country, the upbeat optimism that persists in the real estate sales professional may also be starting to wane. Too many realtors running down too few qualified buyers.

The California Association of Realtors is forecasting a year-end count of 185,000 members compared with more than 199,000 last year:

Badagliacco said she knows people like to "poke fun at the Realtor in the nice car," (like Markus Arelius at Rancid Truth blog!) but she expects there to be fewer objects for pokes and jokes in coming years.

In California, where home sales continue to decline, between 110,000 and 140,000 agents are sustainable long-term so she expects bigger drops in membership in the next two years.

Due to the national downturn in the real estate industry, the National Association of Realtors predicts a 4% decline in realtor ranks in 2007.

Net Depatures from California 2000-2006: 900,000 people

Wow! 900,000 people net have left the state of California over the last 7 years?

Why so many net departures from the Golden State?

The OC Register cites housing affordability as the main culprit.

Let's face it. Everyone wants to live here and experience the euphoria of signing that dotted line on the mortgage papers leading to condo serfitude at 10 times their annual gross income.

More evidence that OC home sales starting to tank

The International Herald Tribune reports a 12 year low of home sales in 6 California counties, including Orange County.

July home sales (total volume) in these counties actually increased .6 percent, but year-on-year July 2006 to July 2007 sales fell 27.4%

Thinking about buying a home? Watch for Rotten Neighbors

Just one more key question and risk to consider when wading in the night time waters of OC real estate.

Sure, there are the basic questions to consider like: How can I afford to buy a home?, how will I manage to finance it?, can I trust real estate agents and mortgage brokers to toe the line and look after my interests?

Then there's the age-old question that never seems to get answered until it's too late:

Jeeze, what if I move in next to a rotten neighbor?

Well help is soon on the way. RottenNeighbor.com is a new website that just might help prospective homebuyers in certain communities in the United States avoid the critical error of residing next to the loud, late night jacuzzi parties, all-night Mexican party music, aspiring rap-artist, barking dogs and vehicle owners who ignore parking etiquette and other homeowner association faux pa's.

Why Orange County has serious housing issues

The house of Nostradamus, St. Remy, France

If you want to gain insight into why Orange County California is, and likely will remain to be, anti-thesis to the American dream, read this article now from the Dr. Housing Bubble Blog eloquently entitled "Nostradamus in the House".

This piece explains the current housing affordability crisis and possible future scenarios that could either exacerbate, or relieve the crisis to some extent.

The serious challenge for Orange County California today and going forward is that the cost to become a dreamy-eyed American homeowner is complete out of sync with the reality of local gross annual incomes, let alone take home pay. If one wishes to experience a textbook case of household budgetary crisis after signing a typical home mortgage, well look no further. Orange County is the right place to do your research.

Yes, indeed, there are many wealthy individuals and families living here, but we still have a median income in Orange County, which is very telling. The majority of people in residing in Orange County, the median, earn just gross $60,000 per year.

Affording a monthly mortgage payment with homes price at $600K to $700k (homedebtorship) is difficult enough with incomes failing to rise in proportion to home prices every year. Now with the restriction of lending standards and indeed, a reduction of the specially-invented-for-California "unorthodox" mortgage instruments, which were previously abundant and available to anyone that could fog a mirror, the mere idea of "homeownership", or even the "second place option" where most people like to gloat, called "homedebtorship", may be falling further and further out of reach for most residents here.

From the illegal immigrant resident to the local factory worker to the MBA college grad and local tech sales executive, the affordability question remains largely unanswered.

And Realtors Wept - Part II

As a follow-up to the previous post And Realtors Wept, the hits keep coming:

American Home Mortgage has offically declared bankruptcy today according to Bloomberg.

Where is that cushy mattress when you need it?

California Leads Nation in Foreclosures in July 2007

There's something special about being ranked No. 1 in the nation.

Not talking USC football here. (Although Rancid Truth hereby predicts a 12-0-0 season for the Trojans in 2007. Remember you heard it hear first).

No, unfortunately California earns the No. 1 distinction in another, more dismal category: home foreclosures.

California year-to-date pre-foreclosures are at 132,101.

For July, 23,662 foreclosures were filed in the state. Florida is a close second to the Golden State with 21,120 filings in the same month.

"The numbers are dismal, but we had better get used to it because the
blood-letting will likely continue for another 12-18 months," says Foreclosures.com President Alexis McGee. "It's a tough reality, but many more overextended homeowners not even in default yet won't be able to refinance because of tightened credit markets and will eventually lose their homes to foreclosure."

Scary.

So you want to destroy your own mortgage company? Just follow these simple instructions.

Morgan at the Blown Mortgage blog provides his readers a critical overview of what likely occured behind the scenes of the prolific mortgage lender meltdowns in the United States the last several months. See his recent post: How To Torpedo Your Mortgage Company in 15 Easy Steps.

And a nice healthy dose of industry-scathing sarcasm, I might add, to jump start your week!

Rising Rates + Stricter Lending Standards = Fewer Qualified Buyers

Take heart, my real estate flogging friends.

There IS still a pool of prospective homebuyers still out there.

But indeed, that watering hole of prospective home buyers is about to get a whole lot smaller.

Ah, and then finally - a valuable nugget of common sense and operational wisdown from Wells Fargo and Wachovia banks!:

"Raising rates and imposing stricter standards on some of their most creditworthy borrowers as slumping demand in the mortgage bond market chokes off funding."

"Making it tougher for the most creditworthy borrowers to get mortgages may worsen the two-year-old housing slump and threaten U.S. economic growth by reducing the number of people who can buy houses or how much they can afford to pay."

This means that fewer people in Orange County, and the state of California for that matter, will qualify for a home mortgage loan at all. Those that manage to qualify for a mortgage loan, given the inconvenient median gross income in Orange County of $75,000 per annum, will not be funded to buy homes in the $500K to $750K range. It's highly questionable whether the average Orange County resident (local renter or new arrival) will be able to fund even a $400,000 home.

This begs to question who is going to show up with an "S" on their chest and buy up the rising inventory of OC homes priced in the stratospher of $550 to $800K?

And where will these lending restrictions leave sale prices?

There's only one direction.

Down town.

And if one considers the May 2006 numbers, there were only 495,000 licensed real estate agents in California (one real estate agent for every 52 adults in the state). The self-proclaimed "competitive industry" is going to get a whole lot more competitive. We're talking stifling competition.

It's no longer who you know in that PDA roladex. It'll be who you know who has liquid money in the bank, a steady job for over 6 months, a good-to-fantastic freaking credit rating - and this other little annoyingly absent pre-requisite called "an interest in buying a home right now" during this shittiest of real estate markets ever known.

Assuming realtors find that qualified, and more importantly, informed but motivated, prospective homebuyer, how much home is he/she qualified to purchase? How does that match up with the inventory list of homes and their actual for-sale prices?

Not well, one must admit.

On the other end of the equation, OC homesellers are expecting a little something too. Not much really, just their $300,000 markup on the home sale transaction. I mean, afterall, they earned it. They deserve it. And when they bought the house from the realtor a few years ago, that realtor promised it.

The greed. The deception. And the revulsion, once the rancid truth rears it's ugly head.

Sure, you can lie some of the time. Just not all of the time. Sometimes you need to say the truth to maintain credibility and stay in business.

Orange County Realtors, just say it: "It's not a good time for me to take your money right now. It's not a good time to buy a home. It's better for you to wait."

You can say it.

They know.

It's all coming to a head.

What a wicked web have we woven!?

And Realtors wept

American Home Mortgage, one of the largest and most well-known mortgage lenders in the United States of America, just announced the layoffs of 7,000 of it's 7,750 employees. AHM has also stopped accepting mortgage loan applications following a cease and desist order from the states of New York and Connecticut as an investigation into violations of mortgage banking laws at the company goes into overdrive. More will be known as to AHM's business future following hearings August 24th to determine whether the cease and desist order will be permanent and whether AHM can even keep it's lending license going forward.

AHM CEO Michael Stauss:

"It is with great sadness that American Home has had to take this action which involves so many dedicated employees. Unfortunately, the market conditions in both the secondary mortgage market as well as the national real estate market have deteriorated to the point that we have no realistic alternative."

More evidence that the real estate market is slowly, but surely unraveling.

Let's hope the guy behind the curtain comes out with a mattress to ensure that soft landing repeatedly promised by the NAR, that group of oh so in-the-know, trusted advisors.

Jim Cramer Re: Troubled Mortgage Lenders: "You Can't Trust Any Of These Companies"

Some classic Cramer lines regarding the sub-prime fiasco and advice for stockholders in the housing market to be the "first man out" now:

"These companies are at the mercy of banks."

"They're future is out of their control."

"Why don't more people talk about this? Because it inspires tremendous panic. It's first man out lives."

Wow. This is really messed up.
I love you Cramer, but what the hell?

My response to this would be: "No freaking Shit, dude! Nice for you to show up for the funeral! Where have you been?".

It's all well and good to walk out of your house, hand over the keys to Larry at the bank, and call up your broker to dump all your housing stocks, but one should question whether it's accurate to suggest that anyone will be the first one out anymore. I mean, come on, over 90 national or well-known regional American mortgage lenders have tanked already.

More importantly, when does the music stop and who will be standing there holding the bag of flaming shit when it does? The mortgage lender? The bank? The adept stockholder?

Think again.

My friends, it will be you. And it will be me. American taxpayers will be holding the bag, ultimately. I'm afraid this time there's no sneaking out of the restaurant to force the "other guy" to pick up the tab. Some might make out OK short-term by selling off their housing stock before the rub out, but we're all going to get nailed in the end. It's inevitable. How else can I put this? 'This brutha is gonna smutha yo mutha'.

Now watch.

The Fed will not raise rates in a vain attempt to prevent additional housing market panic.

Inflation will continue to rage. Prices for goods and services in the USA are going to rise substantially.

There is a freaking war still on, with no end in sight. Gotta pay for the new US embassy, the surge, the bribery of the Iraqi army, and elected officials.

The US dollar's value will be so eroded, American buying power will continue to decline.

The US government can't keep borrowing without offering stronger backing and security.

Federal and state income taxes will have to be raised, and not by a little bit either.

Banks, mortgage lenders, stupid homedebtors and everybody else tied to the irrational exhuberance of the housing run up will expect hand outs from "that building the walks around and does shit" (Lewis Black's favorite metaphor for the American government.)

The cost of money will rise significantly as rates of interest must be adjusted higher to prevent a complete US dollar bust and prevent an inflationary tailspin.

Foreign investors will be attracted to higher rates of interest, but not to the US dollar currency.

Lending standards, qualification processes will become even more restricted. Unconventional lending instruments will be pulled from bank and mortgage lender offerings. The flow of easy credit without question and without merit will grind to a screeching halt nationwide and then worldwide.

Housing inventories will continue to rise.

Home price may even rise moderately for a time in some overvalued markets, but it will not be relevant because American take-home incomes are so far out of alignment.

Realtors can line up zombies to their Zig-Zigler, stone-cold heart's delight. It will not matter. The majority of prospective homebuyers, even if they just came out of a coma and still punch drunk from the 2002-2006 irrational exhuberance and Realtor Kool-Aid, will not be able to afford or qualify for the types of loans required to buy $700K, $600K, hell even $450K cement shitbox condos.

The whole shit will come crashing down on our heads.

Got helmet?

As if paying off a huge mortgage wasn't bad enough

Imagine, as a homedebtor, having to deal with podantic homeowner's associations such as these.
Great story from Salvador Hernandez and Cristina Bautista of the Orange County Register. Excellent photos by Bruce Chambers too.

Just hard to believe, since most homedebtors in Orange County, California where Aliso Viejo is located:

a.) Don't have a basement (building codes regarding earthquakes prevent this), and

b.) Usually store all of their personal shit in their garage, which means,

c.) They are damn lucky if they can manage to park even one of their typically 2 family cars inside the garage 7 days a week.

Just take a drive around any Orange County community on a Saturday afternoon - Aliso Viejo, Mission Viejo, Lake Forest, it doesn't matter.

Now notice all the garage doors wide open and check out all of the junk inside. Not everyone does this, but I'd be willing to wager that over 50% do use the garage as a storage location. Some people are down right neat freaks and are anti-packrat. The rest don't have a choice due to a complete lack of space - or lack money to pay for monthly mini-storage.

Maybe the homeowner's association would like to donate part of their monthly dues to financing more affordable, local personal storage units to it's members? Just an idea.

This kind of callousness and short-sighted thinking is what makes the OC Register story about the Henderson family in Aliso Viejo all the more sad. Is it too much to ask to go over to their house and talk to them? Does everything have to be drawn out into a legal quagmire? What about the neighbors? Could they offer some help?

Probably not, they don't have any room in their garage either.

Yeah, it's 75 degrees out and sunny every day of the week here in OC. But the hearts of some people around these parts are just stone cold.

Maybe the first of many negative dividends realized as a result of the housing downturn and unfulfilled expectations.

(Photos by Bruce Chambers of the OC Register)

Cramer Says: "Dump Your House"!

Jim Cramer from CNBC on the collossal housing crash and whether you should keep paying your mortgage on a so-called "asset" declining in value, or just dump your losses and rent.

Very compelling statement also on prioritization of paying your bills: Pay off credit cards first, THEN pay your mortgage.

Nice!

Transcript Courtesy of Housing Doom:

Here's the video link: http://tinyurl.com/2kqgnf

Transcript:

Torabi: "I have to bring up a video we did yesterday that was entitled ‘Walk away from your house’". Torabi: "Jim Cramer says, y’know, ‘there is a time to walk away from your house’. To re-visit the video yesterday, you said, ‘when your house is down 20%, essentially, when you have no more equity left…’"

Cramer: "Right"Torabi: "…that’s a good time to sell…"

Cramer: "Yeah"Torabi: "… but what [unintelligible] because that"

Cramer: "Well not just sell, to walk away. You can’t sell it."

Torabi: "How do you walk away?"

Cramer: "Well you just default on the mortgage. It makes huge economic sense. You go rent. Uh, you don’t want to lose your job, so you keep your car. Uh, you keep your credit cards so you can buy, and all that really happens is is that you made a bet and you lost, so don’t compound it by continuing to pay."

Torabi: "Now the hierarchy of debt, you were saying also that y’know, your credit card debt should be less of a priority than if your house is losing value"

Cramer: "Oh, yeah, credit cards are much more important than your house. Remember, your house is only a good bet if you can build equity. But if you are going to lose money each month, you might as well rent. You shouldn’t own."

Torabi: "And, but, yesterday you’re also saying there are no places in this country where there is value in homes. A lot of homes are depreciating…"

Cramer: "No, No, there is no place where [mumble] you wouldn’t be down on your home if you bought it in 2006, that’s what the issue is. So, I’m saying that buying homes in 2006 was like buying the Nasdaq in February of 2000. They’re very very similar - it was better to be margined out than to continue to put capital against those Nasdaq stocks."

Cramer: "There was a report this morning by David, I believe it was David, uh, Blitzer, on, when I was on with the wonderful and fabulous Erin Burnett and it was that the, some housing prices have, uh, been, have actually stopped going down and some are going up and I just think that’s not true. I think, like, bad CDOs, and, like, bad leveraged loans, the actual mark to market is down everywhere. I get that from the 5 homebuilders whose conference calls I listen to. There are no up markets, and there are markets that are falling 20-30%, and those are the ones where it’s much smarter to walk away from your house."

Torabi: "Is the 20-30%… what’s that based on, or is that just…"

Cramer: "It’s where the, uh, purchase prices are, uh, when you back in the discounts. The discounts are very hard to see, cause all the homebuilders do two things: One is is that they offer incentives that don’t surface, so the list price is $250,000, but you’ll get rebates just like a car, so the list price of a car is $25,000, y’know, but you’re really only paying $18,000, so take in that, and the second thing is is that there’ll be Realtors, and what’ll happen is is that you’ll say ‘look - the list price is $225,000′, but you can negotiate down and go $190,000. I’m using the negotiable prices.

Cramer: "This is happening in the inland empire, in Sacramento, uh, it’s happening in Phoenix, it’s happening in Denver, and it’s happening in Las Vegas, and in southern California, uh, anywhere near the bread, the so-called bread basket, Modesto, these are all places where there’s tremendous overbuilding, and where it may pay to leave your house."

Hey Jim,

"Boo-Yah!" from overpriced and overvalued Orange County, Southern California.

California Foreclosures in June 2007: Up 799%

And the worst may lie before us all. Brace yourselves.

Purveyors of Ponzi: Destroyed OC Mortgage Lenders

John Lansner's Blog (OC Register) shares with us a demoralizing list of OC mortgage lenders who have officially surfed their last wave. Pretty sombering shit when you consider that the people who worked at many of these companies are now pounding the OC pavements this summer looking for new work.

Orange County & Irvine Slammed by Slate.com Article

Mr. Daniel Gross of Slate.com unleashes a rancid torrent of truth about the Orange County housing market, with a special dose of vitriol - nicely delivered - for that carefully planned OC McCity called Irvine, which Mr. Gross generously dubs "a center of reckless real estate lending and borrowing" and "the nation's capital of real estate folly".

Until recently, Orange County was New Jersey to Los Angeles's New York -- upscale but generally ignored, and not nearly so chic or happening as its urbane neighbor. Television helped change the image with glitzy offerings such as "The O.C.," "Laguna Beach" and "The Real Housewives of Orange County." These shows portray the county's glittering beach communities as the capital of plastic surgery and extreme consumption. But inland, just over the hills, the massive planned community of Irvine has become the nation's capital of real estate folly.

Wow. Ouch.

Yeah, see that gaping wound I have right over there? Yeah, I'd like you to throw a fistful of salt in it please. What? No salt? Well, do you have terpentine?

Indeed sub-prime mortgage loans (even prime loans), irrational exhuberance for real estate of any shape, color or size, and financial illiteracy are indeed biting the OC middle class and even the more well-to-do.

Construction Permits for New OC Homes Crashing

Prudence.

Demonstrating prudence when running a real estate business deserves acknowledgement. Business leaders respect that. Employees appreciate it. And investors? Well, they pretty much expect prudence to be a given from the start, and they're easily pissed off when a lack of sound business judgement taps into their hard earned resources.

And let's face it. Investors in home building activities, if there are any left, have had good reason to be disappointed. Finally, homebuilders may be putting their hammers down long enough to listen to their investors and take a look at the residential real estate market.

Home builders in Orange County, California are finally demonstrating some much needed caution - and common sense. The LA Times reports that permits for new homes crashed by 85% from the previous year, from 225 in June 2006 to only 1,448 in June 2007. Seems as though homebuilders have placed some weight on actually being able to sell the homes they build at a reasonable price, rather than just build like no tomorrow and decide what to do about pricing and incentives later on.

Good call, homebuilders.

Now, for the love of God, can you please do something about this idiotic page on your website (if only you would take it down until the housing market crash subsides)?

"It's a great time to buy."

Is it? Is it really?

Ventura, California : "Foreclosure Tsunami" On The Way

More of the buyer-seller standoff in Southern California from the Ventura County Star:

"The market's slapped me on the hand, and now I'll be a little less greedy."

- Ventura County California House Flipper & Part Time Century 21 Agent

OC California: "Unbelievable how many people were conned into taking these mortgages"

State of California homeowners, as of July 2007, rank second to only Nevada with the most frequent use of the f-word.

Foreclosure, that is.

The OC Register reports that in Orange County foreclosure filings totaled 1,647 in June, or one for every 589 households. That's down about 8 percent from May, but more than doubled the total compared to June 2006.

There were over nine thousand filings in Orange County, California over the first six months of 2007, over three times the number of foreclosure filings during the same period in 2006.

The OC Register article quotes Dr. Walter Hahn, an Irvine-based real estate economist and consultant, who says that foreclosures will increase going into 2009. Hahn says millions of subprime borrowers and real estate speculators will see their introductory "teaser rates" adust and will not be able to afford higher payments.

"It is just unbelievable how many people were conned into taking these mortgages," Hahn said.

Would we call it that?

Dr. Walter Hahn, 40 years of real estate experience in Southern California

I mean, being "conned" into taking a mortgage? That sounds like pretty strong language, while admittedly probably not as strong as the other f-word being used with just as high frequency in 1 out of every 589 OC households right about now. I don't know. Being conned into doing something sounds so criminal!

There are hundreds of OC mortgage brokers out there still touting the merits of interest-only and pay option ARM loans. Is it OK that people are still being "conned"? Maybe these mortgage brokers are just trying to do their part and contribute to the greater good of Orange County society because they know something most of us do not. Perhaps the rate of interest that the layperson sees today are at an all-time high, while OC mortgage brokers sees lower rates on the horizon?

And what role did Realtors play in selling these homes to home debtors in Orange County?
Did they assuage home debtor concerns about the balloon mortgages, saying it would all be OK and that they could "just refinance in a couple of years"?

Let's remember that the OC median home price was around $600,000 per unit in 2005.
Median gross incomes for families in Orange County, CA hovered at around $75,000 per annum. Those two market variables (some like to call them fundamentals) don't always make good bedfellows, unless you can get creative. Real creative. To buy a home with such an income, well, let's just say it would take "some doing". And some outside of California, where home values tend to be a little more grounded with reality, might call creative home financing "cheating". But let's not use that word. Let's just say the OC realtor found a homebuyer, and just referred them to a "great contact" of theirs in the mortgage business, and, abracapocus, deal is sealed. The homebuyer is now a glorified OC homedebtor and welcomed to the exclusive club! Over there is my accountant Skippy, and over there is my broker, Scooter, and next to the hearth, my realtor-niece Buffy! See you at the martini bar! Don't forget, tee off at 10:00 sharp!

Now fast forward to July 2007. A number of those better-than-median incomed OC homedebtors are falling hopelessly behind with their mortgages. Notices of default are three times what they were a year ago. Lending standards have tightened dramatically in most corners. Inventory of OC homes are increasing. Several large mortgage lenders (many based in Orange County) have gone out of business entirely. Some smaller lenders are trying desperately to stay in business. Meanwhile, Realtors are left scrambling on deck, unsure what message should be relayed to prospective clients: "What are we supposed to say again? 'It's a great time to buy' or 'houses are staying on the market longer than they used to'? "Oh God, what do we say now? What do we say!?"

And the pay option arms and interest-only loans? Hey, whether you need them or not, these same mortgage financing intruments that were used to "con" millions of OC home debtors? They are still in the front window of most banks and lending institutions here, here and here.
Fact is, the instruments might very well make sense to prospective homebuyers who have money to burn, strong cashflow, financial flexibility, and are somehow not averse to interest rate risk of any kind.

"Unbelievable how many people were conned into taking these mortgages".

True. Very true, but nobody put a gun to anyone's head.

And so it is. Caveat emptor, Orange County. Caveat-freaking-emtor!

OC Home Debtors: Are You Forgetting The Tax Man?

Apparently OC home debtors find themselves pre-occupied with the increased mortgage payments on their newly adjusted ARM or interest-only home loans - so much so, that many have neglected to make appropriate financial plans to pay Orange County property taxes.

John Lansner of the OC Register reports from his interview with Mr. Chriss Street, Orange County Treasurer, that 5.5% of OC residents were delinquent on their second installment property tax payments which were due in April 2007.

Street reported that the increase in delinquencies is related to the fact that more taxpayers do not have the ability to pay the tax charges.

"Some of the stories are just grim. People were just desperate," Street said. "Clearly they didn't know what they were getting into."

Was it the local REALTOR that convinced prospective home buyers to "get in now" while interest rates are low and bite off more 6-figure OC home than they could possibly chew?

Or was it the "no problem, we can make it happen for you"-referal to the local ARM and IO mortgage broker, who decided to ignore the ability of the prospective client's ability to pay the mortgage and other budgetary expenses longer term, and to shift them into the ARM and IO variety in order to secure the higher sales commissions?

I suppose it does much matter at this point. More OC home debtors are going to find themselves financially slapped around by the bank on one side and the county on the other.

To MLS & Realtors: Another example why consumers don't trust you anymore

The Southern Cal Multiple Listing Service (MLS) announced to real estate agents several weeks ago that it would be pulling DOM statistics, which represent the number of days a home has been for sale on the market.

So why is this being done?

The Southern Cal MLS claims that this change was implemented for the benefit of real estate consumers (namely prospective home buyers and including home sellers). The DOM numbers previously posted were apparently not accurate and were also overstated - higher than they should be, leading prospective buyers to make inaccurate conclusions as to how motivated the seller is to accept price concessions, etc. Real estate consumers, in the MLS view, do not have the expertise required to properly interpret what the DOM numbers really mean, and that such interpretation should be done through a qualified Realtor or real estate agent. The statistics are still available, but now prospective buyers must ask for them.

"The listing history record is complex and requires some interpretation," said Russ Bergeron, CEO of SoCal MLS. "The SoCal MLS (board) felt that clarity was best achieved by encouraging practitioners to have discussions with their clients about those histories where appropriate, and that the information is best conveyed through a discussion between agents and clients," he said.

Encouraging discussion and dialogue between a Realtor and a prospective client is a good thing.

But this move raises a lot of suspicion and more questions about the practices of the MLS and Realtors.

How does this policy change by the MLS impact the question of legal agency and fiduciary conduct?

If a prospective home buyer has this "encouraged discussion" with a Realtor, and DOM numbers are requested, which DOM numbers will the prospective home buyer receive?

Will they be accurate?

Will they include historical data?

And how will he or she as prospective home buyer know the difference?

What kinds of inferences are today's home shoppers making about a home that is 150 days on the market that need to be "corrected" by a Realtor?

One inference that is already being made in the market place is that home sellers want to hide the truth about the DOM statistics, and that the SoCal MLS and Realtors wish to be accomplices in this effort.

What is perhaps most fascinating of all - and you won't witness it in most industries of business - is the arrogance of these two accomplices: One is the largest national home listing service in Southern California. The other is the largest organization of real estate sales people.

Prospective home buyers are being beckoned by them both.

MLS: Come to us. Trust our massive listing service, second to none.

Realtors: Talk to us. Trust our local market expertise. Help us find your dream home.

Yet, at the same time, and perhaps without realizing it, given the new policy change in the listing of DOM statistics, the MLS and Realtors have just insulted the intelligence of Southern California prospective home buyers.

The truth is, real estate consumers are far more informed than Realtors or the MLS give them credit.

Prospective buyers are trying to do their own homework, except the SoCal MLS and Realtors apparently went to the school where it was OK to rip out pages from research information or just insert new data to support their version of events.

Why not just burn the information entirely?

There is no one correct way to interpret the data. Let is stand on its own, raw and untarnished.

Let it be what it is: profound or immaterial.

The MLS should show it all. Yes, Realtors should weigh in and provide their experienced council. Prospective buyers should also make their own inferences. Home sellers should be allowed to explain it.

Just don't hide or manipulate the information. And don't force less informed consumers to remember to ask for it. That's just deceptive.

This development, is just one example of why Realtors and the MLS system cannot be trusted by real estate consumers going forward.

It's a great time to buy a house in Orange Count.....wait, no it's not.

The OC Register reports today what many have suspected for some time - that the OC housing market is in serious trouble. As of June 21, 2007 home sales are down by a total of 29% from 2006 (including single family homes, condominiums and new homes).

In Lake Forest, CA year to date home sales are down 48.5% in June 2007 compared to June 2006, but the median home price skyrocketed to $647,500.

John Lansner correctly points out that while the total OC median home price is the same as this time last year at $640,000, it is impossible to discern whether actual home sale concessions in 2007 are up or down compared to last year's exchanges (concessions include paying out closing costs and buyer agent commissions, etc.).

It's now July. The summer home sales spectaculars must be in full swing.

Can OC Realtors now, after 6 shaky months, look at prospective buyers in the eye - in that oh so"special way" that a mere computer cannot- and still proclaim: "Hey, it' still a great time to buy"?

They can't.

Orange County + Home Affordability = Oxymoron

ox·y·mo·ron (ks-môrn, -mr-)n. pl. ox·y·mo·ra (-môr, -mr) or ox·y·mo·rons - A rhetorical figure in which incongruous or contradictory terms are combined, as in a "deafening silence" and "a mournful optimist".

Local realtors like to spout off about how "It's a great time to buy now" as well as the OC classic after looking you up and down: "But, darling, everyone wants to live here!" But what these country club realtors and Boiler Room mortgage lenders conveniently forget to mention is that few can truly afford to do so. The median family income in Orange County is now $75,700 gross. Local median home prices are 10 times that.

Any city in Orange County is now considered No. 3 in the Top 10 of least affordable American cities.

So what to do? You have to have a piece of the American dream! You're entitled! You work hard. You pay your taxes! But what if you're Mr. Average Joe in Lake Forest, pulling down $75,700 salary per annum. No commissions or bonuses. How can you get in on the local $750,000 3 bedroom, 2 bath single family?

The truth is you can't. You simply can't afford it. After carefully evaluating your personal budget: cash flows coming in and expenditures going out, including auto loans, education loans, planned expenditures, household expenditures, and any credit card debts, reality starts to sink in. At $75,700 it's time to either lower expectations, rob a bank or move away.

Even if you lived your OC life like a Spartan, shunning those weekend fashion shopping sprees with friends at the Irvine Spectrum, with only $75,700 per annum you cannot afford to buy a single family home in Orange County. Many OC mortgage lenders, after first laughing their asses off to your face, would then try to regain their composure and politely recommend more humble accomodations, such as a 2 door, 2 bedroom flat or condominium.

Got kids? Better get the bunk beds. IKEA has them for $199.99.

St. Joseph Real Estate Kit Selling More Houses Than Realtors 5 to 1

If you are desperate homedebtor facing foreclosure or intending to firesale your home, you'll be relieved to know that you don't have to turn to local blood-sucking realtors to help you bail water.

Just pick up a St. Joseph Statue Home Sales Kit today here or here, and then sit back, relax and watch your collossal financial mistake disappear in front of your very eyes. That's right.

St. Joseph is the patron saint of selling houses. And if selling houses is wrong, then you don't want to be right.

How can St. Joe be so good at selling houses? Easy! This dude works underground!

The solemn tradition of burying St. Joseph in the earth began hundreds of years ago in Europe. During those times, an order of nuns prayed to St. Joseph (the patron saint of the family and household needs) when they needed more lands for convents. The Sisters were encouraged to bury their St. Joseph medals in the ground. The medals evolved into statues, culminaing with the complete "Underground Real Estate Agent" Kit currently available. Today, thousands of homesellers and real estate agents nationwide continue this successful tradition; they are looking for a little divine intervention.

Are you panicking because no one is showing up to your open house events despite frantic "staging" and "Orange County-esque" home primping by your Realtor?

Well, panic no more. Just check out these affadavits.

St. Joseph is kicking the asses of your neighborhood Realtors and taking names.

Irvine's Impac Mortgage Holdings: "Sorry, no dividend this quarter."

While trying to auction off the shittiest of loans, Impac is taking a major beating, having underestimated the losses it would incur by this corrective action.

They then politely proceeded to inform their dumbfounded shareholders that they would not be receiving a 2nd quarter dividend.

Investors responded. Impac's share price fell 21% yesterday.

Impac's share values are down 60% over the last 12 months.

Gee, and it was so much fun on that wild ride to the top.

429 Housing Units For Sale in Lake Forest, CA

According to ZipRealty as of June 28, 2007 there are now 429 inventory units for sales in Lake Forest, CA (Orange County). Not too shabby when you consider we have a population here of approximately 69,000 people (2005 stat).

223 of these 429 units in Lake Forest are single-family home units.

On May 24th OC Prudent Bears reported that Mission Viejo, California, our affluent neighbors to the south of Lake Forest, was now witnessing home inventory of over 1,000 units.

Now OC Prudent Bears shares with us that Newport Beach, Calfifornia has achieved the same notoriety.

Wow! Now just stand back and watch the numbers grow.

But the Realtor told me everyone wants to live here

Think again.

Mr. Esmael Adibi, the Director of Chapman University's Anderson Center for Economic Research, and Mr. James Doti, the president and Donald Bren Distinguished Chair of Business and Economics of Chapman University, both claimed today that over the short-term fewer people will be migrating to Orange County, California.

Why? Here's the article from the Daily Pilot.

Mr. Adibi:

"Orange County is going to be a strong economy no matter what, but there will be fewer people moving in because of high housing prices and unaffordability," said Doti, the president and Donald Bren Distinguished Chair of Business and Economics at Chapman. "But we hope in the coming years, that will subside because of the natural amenities this county offers."Those amenities, Doti said, included the county's landscape, its educational system and its bustling arts scene.

Also, he said, the increased reliance on exports would turn the area into a trading hub."Global trade will be greatest with Asia, Southeast Asia and the trading port for much of that will be Southern California," he said.

A problem for the county, according to Doti and Adibi, was the housing market, which was slowing due to high mortgage rates and a decrease in the population — between the ages of 25 and 49 — that usually bought homes. Adibi said the average Orange County family paid 49.8% of its gross income on mortgage payments last year, a record amount.

While we keep reading how the National Association of Realtors and the California Association of Realtors wish to position themselves and staunch advocates of affordable housing, it's not quite making it happen on the streets of Orange County.

Median home prices in Orange Country rose again in May by 0.8% to $635,000.

I mean, when you think about it, why would realtors want home prices to come down to affordable levels when that would have an adverse affect on their income (6% of the home value sale)? I guess, you'd have to assume then that a home sale at any price, even if it's lower, is better than no sale at all. And a commission check is better than no commission check at all.

OK.

Good to be clear about what's important to realtors - and to what extent they are truly interested in affordable home prices in Orange County.

The Real Estate Special Interest Payouts To Congress

Most Americans view with disdain the daily "greasing of the skids" by special interest groups to gain favorable influence for policy votes in Congress. And who can blame them? One could argue that the bribe-like activities of special interest groups, PACs (political action commitees) in Washington D.C. are amoral and corruptive. It's that special, not-so-perfect aspect of the American political system.

Indeed there are thousands of special interest groups executing their plans every week in Washington D.C.. Now it is possible to track whether your own representative in Congress is being influenced monetarily, by whom and by how much. Just visit the website: Maplight.org.

In our main area of interest, real estate, there are some interesting surprises.
So who in Washington is getting the most slap-back cash from real estate industry special interest groups including realtors, subdividers, ?

Well, according to Maplight. org - and this may be just the tip of the iceberg of total funds paid, here you go, my fellow Americans:

Top 10 Recipients Funded by Real Estate Industry (all groups)
Recipient Amount
Joseph Lieberman: $966,665
Hillary Clinton: $632,830
Jon Kyl: $352,994
John Isakson: $325,810
Bob Corker: $290,403
Richard Santorum: $279,423
Bill Nelson: $227,330
Harold Ford: $219,633
Charles Schumer: $219,514 (Mr. SubPrime-Bailout-Program)
Michael DeWine: $183,630

Top 10 Recipients Funded by Real Estate Agents & Managers
Recipient Amount
Hillary Clinton: $530,058
Joseph Lieberman: $356,660
John Isakson: $199,200
Charles Schumer: $193,812
Jon Kyl: $170,932
Richard Santorum: $162,825
Bob Corker: $157,465
Robert Menendez: $154,930
Bill Nelson: $151,280
Mel Martinez: $143,900

Gee, with some of these nice payouts, these Congressional problem solvers might - just might mind you - be able to afford a down payment on an Orange County single family home!

A housing "bloodbath"!

Warning! This article is pretty depressing.

Bloomberg reports.

The Next Time You Hear: "It's a great time to buy a house"

Grab the 2007 PMI mortgage study report and proceed to sit down in your seat and fasten your seatbelt. California real estate values are predicted to go "down town" in two years:

Some homeowners in California, Florida and the southwestern U.S. now face more than a 60 percent chance their property will be worth less in two years, according to a new study by a mortgage insurer.

The index found that 15 of the 50 largest metro areas in theU.S. have a
greater than 50 percent chance of seeing price drops.Eleven of those markets are
in California and Florida, including Los Angeles and Miami. These are areas that
enjoyed some of the largest price run-ups during a five-year housing boom
that ended nearly two years ago.

"What the markets with the greatest risk of decline have in common is a
history of price volatility: rapidly rising rates of price appreciation above
the long-term average followed by a recent sharp slowdown in the rate of
appreciation," said Mark Milner, PMI's chief risk officer.The riskiest of all
markets are Riverside, California; Phoenix; Las Vegas and West Palm Beach,
Florida — each with a greater-than-60 percent chance of depreciation.

Realtors throughout California love to pat themselves on the back for the fantastic appreciation in home values over the last 5 years.

Do these new findings by PMI mean that one can expect to see Realtors flogging themselves over the next 2 to 5 years when the market comes to a complete and horrifying crash?

The answer is yes, only they won't be doing so literally. Maybe verbally.

"All real estate is local. We're just going through a slight market correction right now."

"Now that the only the serious buyers remain and the speculators have been removed from the market, we can fully expect normalcy of supply and demand to continue as before."

"What we're experiencing is a normal adjustment of the real estate market business cycle."

"We're bound to experience a few bumps along the way."

Hey, have you ever noticed how the real estate sales pitches sound so similar to that of the airline industry's intercom announcements from the pilot?

"We're experiencing a little turbulence. Please take your seat and fasten your seatbelts."

"We'll be serving a little snack"

"We're gonna be a little late."

So yeah, the next time you hear a realtor say to you: "Hi! It's a great time to buy a house", just take your seat and fasten your seatbelts. This means the housing market is about to crash.

Awww, poor baby, real estate fall down!

Keith over at the Housing Panic Blog shines light on the fact that realtors can't resist it either. They too just had to partake in the irrational exhuberance of the housing market Ponzi scheme themselves, choosing to use lies and deception to make money for themselves.

And now they're probably wondering just what happened to all of those houses bursting with so much value that cash was overflowing out of the windows?

It was an American dream.

And now it's an American nightmare.

An example of evildoers getting their just desserts? Perhaps.

It's more a reminder that when you start thinking you know it all, that you're better than everybody else, that you deserve 6% of the sale value just because that's the way it's always been and always should be (and act as if you worked so hard to get that lower price - for less commission? - yeah right!), that consumers don't have the right to free, complete, unaltered market and pricing data, and that real estate "never goes down" in value, that "15% is in the bag" (thanks Gary Watts!) - when you consider all of those things then yes, bad things can happen. Kharma.

Unfortunately, thousands of realtors in the United States of America believed and drank in every word that the NAR served up to the main stream media, no questions asked. No critical thinking necessary as to what might be best for consumers- like, oh I don't know, let's say the truth -that homedebtors, given their incomes, should never have been cheerleaded into homes they could never otherwise afford using risky instruments from the "mortgage broker I know" to seal the deal and the sales commission.

It all comes home to roost. And it's very uncomfortable.

Realtors are the real estate industry's self-proclaimed "trusted advisors", to whom all prospective home buyers and home sellers should flock.

There are some good, honest Realtors out there. That must be said. But let me also say this: They are very, very, very hard to find. I mean, really hard to find. I would argue that especially now, during these strained periods when single family homes and condos stay on the market for 249 days or more, that the good realtors, the cream of the crop, ones that really care about their customers and future referrals, rise to the occasion and survive.

What happens to the morally bankrupt, I'll-do-this-for-you-but-don't-forget-my-6% realtors?

They'll survive this too. But their reputation, along with that of the NAR, the sales association that protects them and propogates lies to the market place, will likely never recover fully.

Unemployment Remains Static in OC in May 2007

Some good news for the local and state economies.

The OC Business Journal reports that unemployment in OC stayed at 3.5% in May, the same rate as recorded in April 2007. This still constitutes a year on year increase in unemployment for Orange County, California of 0.3% from May 2006.

California state-wide unemployment fell from 5% to 4.9% in May 2007.

National Association of Homebuilders: Actually, housing market worse than just "shitty"

Man, it sure was a lot easier to lie when the market was going so well.

Apparently, American realtors will have to create some different Zig Ziglar sales terminology and refrain from the famous catch all phrases like "the market is just down" or "it's now a buyer's market" or "it's a decent market to buy and sell in".

Bullshit! The market is tanking and the REIC is complicit in it!

"Come on! Now's the time! Sign now and get in to your dream house at this low price while you still can! You'll never forgive yourself for not jumping on the opportunity. Oh, the adjustable rate mortgage? Look, don't worry. Values are climbing and you can always refinance it after a couple of years to a new low rate!"

And people are still standing around wondering why the NAR and realtors in the United States of America have a credibility problem?

Gee, if only we weren't pathological liars in the first place, our self-declared position as trusted advisors in the real estate industry might remain tenable.

The National Association of Homebuilders just scored the current American housing market with their housing index of 28, which is the worst rating in 16 years. A score of 50 signifies postive market sentiment. 30 means "shitty".

Economic Snapshot for June 2007

Dr. Christian Weller, Senior Fellow of the Center for American Progress and the Economic Policy Institute, certainly doesn't pull any punches when laying down the economic outlook from June 2007.

Jesus, are things really this bad? Here are some of Dr. Weller's sobering observations:

Wage growth is weak . Factoring in inflation, hourly wages were 2.3% higher and weekly wages were 1.5% higher in April 2007 than in March 2001.

Benefits are disappearing. The share of private sector workers with a pension dropped from 50.3% in 2000 to 45.0% in 2005, the last year for which data are available, and the share of people with employer-provided health insurance dropped from 63.6% to 59.5%.

Family debt is on the rise. In the first quarter of 2007, household
debt fell relative to disposable income for the first time in five years, but
still stayed at a comparatively high 130.7%, the third highest on record. In the fourth quarter of 2006, families spent 14.5% of their disposable income to service their debt—the largest share since 1980.

Families feel the pressure. The share of new mortgages entering
foreclosure was 0.5% in the fourth quarter of 2006, the highest level on record since 1979. The default rate on credit cards grew to 3.9% in the first quarter, an increase of 29.5% over the first quarter of 2006. And the personal bankruptcy rate, measured as bankruptcy cases relative to the U.S. population, grew by 51.5% from the first to the fourth quarter of 2006.

Housing market slows. New home sales increased in April 2007, spurred by an unprecedented decline in prices. The median price of new homes sold dropped by 11.1%, the largest one-month drop since the Census first recorded these data in 1963.

Gas prices rise sharply. In the first week of June, gasoline prices
averaged $3.15 per gallon. In inflation-adjusted terms, gasoline was at its highest level since June 1981 and it was 91.9% more expensive than in March 2001.

Savings plummet. The personal savings rate of -0.8% in the first
quarter of 2007 marked the eight quarter in a row with a negative personal savings rate.

Already weak job growth slows. Monthly job growth since March 2001 has averaged an annualized 0.6%. Over the past 12 months, the average monthly job growth was 160,400 jobs, compared to 213,400 in the preceding 12 months.

Poverty climbs. The poverty rate increased to 12.6% in 2005, the last year for which data are available, from 11.3% in 2000.

The government’s finances deteriorated. In 2001, the CBO anticipated that the government balance between 2002 and 2011 would be in the black to the tune of $5.6 trillion. Today, the CBO projects deficits between 2002 and 2011 of $2.9 trillion. This constitutes a deterioration for the period 2002 to 2011 of $8.5 trillion.

These deficits won’t shrink: Between 2007 and 2016, the CBO predicts cumulative deficits of $1.8 trillion. If AMT reform and permanent tax cuts for the wealthy are included, the total deficit for the next decade would come to $3.5 trillion—even if the costs for the wars in Iraq and Afghanistan drop below current projections in a few years.

This endangers our economic independence. Foreign investors bought 82% of new Treasury debt and the share of U.S. foreign-held debt grew to 46% from 32% from March 2001 to March 2007. The quarterly interest payments from the federal government to foreigners rose to $38 billion in the fourth quarter of 2006 from $21 billion in the first quarter of 2001.

Trade deficit remains high despite strong export growth. In the first quarter of 2006, the trade deficit rose slightly to 5.3% of gross domestic product from 5.2% in the fourth quarter of 2006. Yet these last trade deficits are still larger than any trade deficit since the Great Depression recorded before the third quarter of 2004.

Following last week's approval ratings for President George W. Bush (Only 19% of Americans consider the country to be "on the right track"? Are we sure he's taking pointers on economic policy from the Almighty?), these economic findings just add more fuel to the fire.

Read the full report here.

Mortgage Bankers Association: 4 States Ruining It For Everybody

Dammit! If it weren't for the high rates of foreclosures in the states of California, Nevada, Florida and Arizona, this media circus about the national housing bubble crash would easily blow over like a Phoenix tumbleweed, or a category 2 hurricane approaching Orlando.

"Those states have special circumstances that do not reflect what is happening in the rest of the country." - Doug Duncan, MBA's Chief Economist and Senior Vice President of Research and Business Development

In other words, nothing to see here people! Move along. Nothing to see here!

Today's Housing Index Predicted to be "Shitty"

So what will it be the index score be from the National Association of Home Builders which will be released at 10:00 a.m. PST today? A score of 50 means positive sentiment about the market. The economic propeller heads on Wall Street are predicting the scoring will be around 30, which is statistically equivalent to the English word: "shitty".

There you have it. The housing market in the United States of America is hereby predicted to be "shitty".

Picking A Horse

After living and working in Europe for 9 years (1996-2005) and then returning to the United States in early 2005 I soon discovered that the United States of America I left was not the same country to which I returned. I am ever fascinated by how the people of America and the society at large has changed so profoundly in such a short time. Perhaps it was Bill Clinton. Perhaps it was the internet. Perhaps it was 9/11. Perhaps it was the resurgence of Christian spirtuality. Perhaps all of the above in equal doses.

Of particular interest to me has been the impact of the national, public and local media, and how Americans like me get their information and form public opinions about events both local and further afield.

I left the United States of America in the summer of 1996 with Bill Clinton in the White House, the Chicago Bulls winning their 4th NBA title, the Summer Olympics in Atlanta, and the birth of a cloned sheep named Dolly. I returned to what I now call the Divided States of America in early 2005 with George W. Bush in the White House, no NHL hockey season, north Korea with nuclear weapons and virtually little if any conventional war coverage as to what is happening on the ground in Iraq.

Whether you as a reader are politically a conservative or a liberal (or libertarian given today's PC, semantic-driven culture), you cannot deny the fact that our country has been completely divided and polarized by poltical dogma. If you don't support the Iraq war, you are painted with the blue brush. If you support faith-based charities receiving government funds, then prepare to be painted with a red brush. Like NASCAR? You're red! Do you watch HBO comedy specials? Your blue! Believe in God? You're red! Agree with Darwin's Theory and understand Ocham's razor? You probably blue, or a just a communist.

It's all a huge joke.

I find myself wondering just what in the hell happened to the United States of America I knew?

There is a complete and utter lack of focus on important national issues. And as a result of political compartmentalization (right or left) and the consequent discounting of public opinions, public dialogue about the important issues and ways to solve them has been stifled to a whisper:

Social Security
National Debt
National Trade Deficit
Racism
(i.e. racial prejudice. The word "racism" is a useless term anymore in American
society. It's too loaded.)
Poverty
Education
Health Care Crisis
Crime
U.S. Politics
Art
Protection of privacy and consitutional
rights
International Terrorism

The 5:00 p.m. national news in America has morphed into "national irritainment" with names like Sean Hannity or *gasp* Katie Couric, and more coverage of the deaths or incarcerations of buxom blondes than any of the national or international events that shape our world, nation and local communities. Entertainment has replaced journalism altogether and crushed the American spirit and thirst for being properly informed, responsible citizens. The most popular source of national and international news in United States of America is FoxNews. In 2007, that sentence alone pretty much speaks for itself.

Since coming back to the USA, Americans around me seem to support the notion that one should "toe the line" politically on all issues. Either you are Republican or Democrat. There should be no "waffling" or "flip-flopping".

Well, this has pissed me off to no end. And I'm sure that I'm not alone.

I agree with the sentiment of comedian Chris Rock who once complained in a very funny way during a recent stand up act about this "toeing the line" on issues in America. It's the issues that matter, not the political allegiance. Personally, as Chris Rock stated, I am conservative or liberal depending on the issue at hand.

When it comes to crime, indeed I am as conservative as it gets. When it comes to the arts and freedom of speech, privacy rights, access to information, I'm a "bleeding heart" liberal.

Is that in an of itself an oxymoron or contradictory? No, it is not. And yet perhaps it is, but again, it would depend on the specific issue at hand.

Ain't it cool? It's called being American.

Welcome back.

I, for one, am hoping for significant change in the future of American culture. I am optimistic about this because even for a country like the United States shit can go horribly bad for only so long. I believe that goodness and common sense can prevail again. Americans are innovative and inventive. They want the latest, the greatest and the best. They love the underdog. They value modesty, common sense, respect for the fellow man. They value self-sacrifice and self control.

Today I'm picking a horse for the 2008 presidential election and I recognize already that it is a long shot. No one believes he will be nominated by the Republican party. Nevertheless, I am supporting Ron Paul for President in 2008. And if I may be so bold as to say so, my fellow Americans, you should too. Here's why.

Mortgage Payment Schock: From $558/mo to $1,929/mo

Interest rates for 30 year fixed-rate mortgages increased by .21% to 6.74% from 6.53%. The result will add insult to injury for Ajustable Rate Mortgage holders who face monthy payment adjustments in 2007. The recent hike in mortgage rates also serves as a sort of fire-breathing dragon in the path of prospective homebuyers, many of whom even without the rate hike face new challenges qualifying for home loans given their current take home pay.

"For people on the margin, any increase (in rates) will be bringing more people into the danger zone," says Susan Wachter, professor of real estate and finance at the University of Pennsylvania. "When we have a number of people already unable to make their payments and unable to refinance, these increases are significant."

Buyers who got an ARM loan in June 2005 and are facing their first payment adjustment now are in for a shock. Their monthly payments, assuming they bought a median-price home, would soar $558 a month to $1,929, according to Genworth.

Meanwhile, in Southern California median home prices (condos, single family homes, multiple-family homes) rose again in May 2007. But how much longer can the high prices sustain themselves in the middle to high range?

Median take home incomes are not rising and remain completely out of alignment (i.e. 10 times less than most single family home prices in OC) with reality. Inventories of homes in Orange County Southern California continue to rise. Tighter state lending standards such as SB 385 may pave the way to greater prudence, responsibility and financial oversight in the mortgage lending game.

And now the interest rates.

If mortgage brokers, realtors and desperate homesellers considered it a challenge to find buyers back in May, how will the rise in interests rates help?

It won't.

Now might be an appropriate time for the above parties to pray to the U.S. currency value and inflation Gods that the US dollar miraculously reunites with its previous spending power, otherwise things are going to get very, very ugly indeed.

Wave of Mutilation Delayed

Bruce Chambers of the OC Register reports today that Orange County home sales declined 29% in May 2007 compared to the same month last year, but median home prices in the county increased a fraction, still hovering around the $635,000 mark.

Real estate agents in Orange County starting to report pick ups in sales in the area as prospective buyers who were previously parked on the sidelines waiting for the market prices to improve have become impatient and have decided "to get back in the game" now and make offers on homes in inventory.

It looks like the housing crash is over and the impending wave of mutilation has subsided. We can now all return safely to our local mortgage broker offices and hammer out that deal for the six figure home. The taps for easy home financing must have been turned back on full blast again!

And thank goodness. Happy days are here again!

Bob Barker and "Buy me. I'm a house."

Desperate homedebtors in Lake Forest are using Craiglist as an avenue of last resort.

"Buy me. I'm a house."

Please, oh please, with sugar on it, buy my burned out then fixed-up condo for half a million dollars!

Look, when a condo has been on the market in Orange County California for over 120 days, it usually means that something's not quite right, and last month we dedicated a little time to investigate just what might be going wrong at 23101 Cherry Avenue, Apt #20 in Lake Forest. It could be many, or all of the reasons described, but my simple take on this condo, and much of Lake Forest real estate for that matter, is this:

The price is wrong.

Time to call Bob Barker and make it all "Right".

Big Ten Study: Realtors Add No Value

Have you ever been caught in a lie? I mean, it's happened to all of us at one time or another. Maybe a little sweet white lie, or a real mushroom cloud-laying whopper! When it's a really blatant lie and it's suddenly uncovered before you and everyone else, don't you hate that gurgly, sinking feeling in the stomach, as if it were trying to speak for itself: "Oh God, please no!".

Maybe now one can imagine what American realtors, and their political spin organization, the N.A.R., must be going through right now? In 2005, the NAR, in it's own patented arrogant fashion, purported that by using a REALTOR(R), homesellers could achieve as much as 16% more value when selling their home.

Even if this statement were not a provocative, unabashed lie, the NAR seemed to forget that by using such rhetoric they removed the left foot from their mouths and proceed to insert their right leg entirely. Sure, the 16% is a considerable, favourable outcome for homesellers. Good job. Now what about the buyers that your members also represent?

Oh! Uh, errrh, ummm.... yeah. Kind of forgot about them. Um, they gladly pay 16% more for that house?????

Listen, the American public can't wait any longer for Penn & Teller to write up a "Bullshit" TV program on cable about American realtors.

Let's all just step aside and let students from some of the Big Ten schools do what they do best - study, research and then lay it all out in a report for others to see and critique.

Economists at Northwestern University and the University of Wisconsin-Madison (GO BIG TEN!) have recently decimated the NAR's, cannibis-invoked 16% theory with an empirical study. The study results indicate that there is, within a normal margin of error, no benefit whatsoever in using a realtor in terms of home sale value achieved:

But a recent study showed that home sellers in Madison, Wis., along with a little help from an FSBO site, sold their homes for higher prices than their neighbors who used agents.

The report by three economists from Northwestern University and the University of Wisconsin found that homes sold on FSBOMadison.com received an average price of $175,068 during the seven years studied, while homes sold on local multiple listing services (MLS) brought an average price of $173,205. Those averages are essentially equal after taking into account sampling errors.

"The survey validates what we've been saying all along," said Colby Sambrotto, chief executive of ForSaleByOwner.com, a D.I.Y. Web site with a national reach. "Our business is growing very rapidly with listings increasing 50 percent to 70 percent a year," he said. "We're having 60,000 homes listed."

A NAR report from 2005, however, found that, nationally, FSBO sellers got a median price of $198,200, but those sold through an agent went for an average of $230,000, for 16 percent more.

"That 16 percent always smacked us as not true." said Sambrotto. According to him, NAR's data included "non-arm's-length" sales, such as those made to relatives. And, he said, the mix of properties may have skewed toward lower-priced homes.

Glenn Kelman, founder of Redfin, a web-based, discount broker that charges a flat fee of $3,000 to list a house, said, "Consumers are a lot smarter than the real estate industry gives them credit for."

Dammit! If only American real estate consumers would continue their illiterate ways, that 6% realtor commission achieve with nominal effort would continue to be so "in the bag"!

And now some important questions for American real estate agents:

1.) What value-add services do you now provide to the marketplace?

2.) How do realtor services benefit the consumer (homebuyer and homeseller, respectively) any more than using an online and discount broker services already would?

3.) How much will you be charging for issuing such services, and what makes you as a realtor believe residential real estate consumer will be willing to pay it?

Now is a great time to be a Realtor(R). Now is a great time to be a travel agent.